Insurance is a form of protection. It offers financial safeguards in the event that something unforeseen and disastrous were to occur. Yes, insurance is essential and often required by law, but that doesn’t mean it isn’t complicated. Far from it! Insurance is one of the most complex areas that homeowners in Florida have to navigate.  

Two types of insurance property owners must consider when buying a new home are title insurance and homeowner’s insurance. Both offer financial protections, but they serve different purposes and cover distinct aspects of property ownership. Here’s a breakdown of the key differences between the two. 

What Title Insurance Covers 

Title insurance protects the property owner (and the lender with a lender’s policy) from financial loss in the case of title defects, disputes or legal issues related to the property’s ownership. Title insurance covers past issues that may have occurred in the property’s title history before you purchased it. Examples include unpaid liens, outstanding property taxes, undisclosed heirs with claims to the property, or forgery in the chain of title.

Title insurance also provides coverage for potential title problems that might arise in the future.  Title insurance is typically initiated during the real estate closing process and is a one-time payment based on the property’s purchase price. The policy remains in effect as long as you or your heirs have an interest in the property.

Title insurance rates are set by the Florida Department of State and presented in the Florida Administrative Code. Like many areas of a real estate transaction, the party responsible for paying for title insurance can also be up for negotiation.

What Homeowner’s Insurance Covers 

Homeowner’s insurance, on the other hand, protects the homeowner from financial losses due to damage or destruction of the property itself and its contents. It also provides liability coverage in case someone is injured on your property. 

Property owners will shop around for homeowner’s insurance when they prepare to close on a new home, but it’s recommended to regularly shop around for coverage to ensure you are getting the best rate. Unlike title insurance, homeowner’s insurance premiums are paid in regular intervals, often monthly, biannually or annually. 

While both insurances protect homeowners, title insurance specifically focuses on the property’s title and ownership issues. Homeowner’s insurance, on the other hand, covers the physical structure of your home, your personal belongings and provides liability protection. Having both types of insurance is essential for comprehensive protection. 

Our team at the Law Offices of Alex D. Sirulnik, P.A. and ADS Title Services, Inc. can help with all aspects of your South Florida residential real estate closing. Contact us today to ask your questions.