What is title insurance and do I need it?

Title insurance protects against financial loss from defects in a property's title, such as undisclosed liens, ownership disputes, forgery in the chain of title, or recording errors. There are two types: lender's title insurance (required by the lender, protects the lender) and owner's title insurance (optional but strongly recommended, protects your investment). Unlike other insurance, title insurance is a one-time premium paid at closing that covers you for as long as you own the property. Owner's title insurance typically costs 0.5%–1% of the purchase price and can save you from significant financial losses if a title issue surfaces after closing.