There's no doubt that if you finance the purchase of a home your lender will want title insurance or, in Iowa, coverage under the state's guarantee fund.

But you're unlikely to buy title insurance more than a few times in your life, so how do you get a good deal?

Title insurance is a specialized insurance policy. "Lenders" coverage assures that in the event of a title claim against your property that the insurance company will fight to protect your interest (and the insurance company's interest). If the claim is successful, lender's coverage will pay off any mortgage amount you owe to the lender.

"Owners" coverage is additional protection. In essence, it protects your equity, the purchase price of your home above the mortgage amount, and sometimes more.

How do you get the best deals with title insurance? Several strategies stand out.

• Look for a "re-issue" rate. Find out from the title insurer (or the attorney who has been appointed to conduct a title search) if you can have the current policy re-issued. In other words, if there's an existing policy that is five to ten years old, you may be able to get a 10 to 20 percent discount. Ask about re-issue rate whether buying existing homes or new homes -- you can bet the builder's lender required clear title before the first spoon-full of dirt was moved.

• If you have a buyer's market, ask the seller to pay the tab for title insurance. That's one less cost for you at closing.

• Ask about "extended coverage." Title insurance policies normally exclude coverage in the event of lot line debates, unrecorded mechanics liens, and easement problems. Extended coverage can provide protection against such claims.

• See if any title insurance firm has lower rates than others. This is not always the case if, for example, a state insurance agency has set rates.

• Ask about inflation coverage. For instance, what about an inflation rider for owner's coverage -- as the value of the home rises, so does the amount of protection.

Homebuyers may grumble about title insurance, but let's face it: lenders want it so you will get it. But the requirement to get title insurance does not mean you should not shop around and find the policy which works best for you.

Published: February 20, 2001

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