Title insurance is an insurance policy that guarantees the property title is free from the problems of hidden liens and claims. Generally, it is paid for as part of the closing costs. Title insurance pays for title companies to search for problems by examining public records.

Say you buy a home and 5 years later someone turns up with a legitimate claim that they never sold the property. Title insurance protects you against that and other undiscovered liens or claims, easements, and flawed deeds.

Title insurance differs from other types of insurance. Most insurance is a contract where the insurer indemnifies or guarantees another party against a possible loss (such as an accident or death) at a future date. Title insurance attempts to detect, prevent, and eliminate risks and losses caused by title problems which have their source in past events.

Who pays for Title Insurance is a negotiable item between the buyer and seller and in Arizona the terms are specified in the purchase contract. Typically, there are two policies, one is an owner's policy, based on the sales price of the property and guarantees clear and marketable title, this is usually paid for by the seller in Arizona. Then, if the new buyer is getting a loan, there is a lender's policy (based on the loan amount). This policy guarantees the Lender that they are in first-lien position in case of a default on the loan. This policy is usually paid for by the buyer.   A ballpark cost for the insurance is .05% of the purchase price.

The choice of title insurance companies is the buyers, not the sellers or the lenders (although the lender may have a list of approved Title Insurance Companies that must be used in order for them to approve the loan).  

If you shop rates there is a possibility that you might find a variety of rates available. However, it can depend on the state where the property is being purchased. Some states set the rates for all the carriers. Other states set the rates of the premiums but not the other title-related charges. In "file and use" states premiums vary between insurers. Although, once the rates are filed with the state the insurer can not offer discounts that are not part of the tariff. Although, the carriers may differentiate between a discount rate and a reissue rate.   So it pays to be able to ask the right questions, the ones to start with are "Is there a lower rate that is available to me?", "Does it make a difference how long the seller has owned the property?" or "Is there a discount for a first time buyer?"

Once you have asked a couple title companies these questions you should be able to get a feeling for how the pricing works in the state where you are buying property. In the last closing I went to with a buyer, they didn't ask about the rates until the actual closing. The results were a refund of over $500 from the title company based on using a reissue rate. So it proves it never hurts to ask.

If you are shopping rates also be sure to compare the services and limitations on policies so that you can decide whether coverage purchased at a higher rate may be better for your needs. If you are buying a newly constructed home, make certain your title insurance covers claims by sub-contractors.

While researching the article I found a link on-line when looking at the AZ Dept of Real Estate site Titleinsurance.com, (a sponsored advertiser). Titleinsurance.com has an online form that the consumers completes and is sent to as many as five title companies to get quotes. Just to find out how they worked I filled out the minimum required information including, name, email, purchase price (250,000) loan amount (150,000) to see what kind of results I would get. They are outlined below:

Title Co.	Owner's Policy	Lender's Policy	Other Fees	Total
A	957.25	100.00	325.00	1382.25
B	439.00	1167.00	600.00	2206.00
C	439.00	1167.00	553.00	2159.00