There is very little relationship between title insurance and home insurance after the mortgage goes into effect. Home insurance is generally used to protect the property and the structures, while title insurance has only one purpose: to protect the homeowner against errors in land surveys and property records.
Title insurance guarantees that the plot of land and the dwelling you purchase may be legally sold to you by the parties representing the property. This limited insurance protects the homeowner against clerical errors that result in incorrect property lines. Because severe errors can result in entire homes being built across illegal property lines, this insurance can be very handy for the protection of the property owner.
Homeowners insurance actually protects against loss or liability of the property defined in the title insurance. During the application for a mortgage, a title search is performed that identifies the exact plot of land included in the mortgage. Title
insurance is used to protect the new homeowners against the costs associated with errors in the property lines, including moving fence lines or buildings that are not in accordance with property boundaries.
Home insurance then goes into effect and protects the homeowner against the loss of the structures or other property contained on the specified plot of land. Where homeowners insurance becomes involved with title insurance is a situation where the homeowner mistakenly builds a structure such as a fence on property that is not actually included in the property deed.
Homeowners insurance also covers liability costs that happen on the property, such as injuries to people or destruction of property related to an insured condition such as a major storm. Title insurance is only concerned with the boundaries of the property and the chain of ownership of that property as it has been passed down through official sales.
answered Jul 21, 2010 by anonymous