Title insurance protects you, or your mortgage lender, against ownership problems that already existed when the policy was issued. Examples are a forged deed in the chain of past owners, an unpaid lien, a recording error or an unknown heir. You pay for it once, at closing.
New York has two main policies. The owner’s policy protects you, the buyer. The loan policy, often called the lender’s policy, protects your mortgage lender. Your lender will require the loan policy, but the owner’s policy is your choice.
These rules apply the same way across New York State, including New York City and Westchester County.
What title insurance covers
Most insurance covers the future. Title insurance looks backward, at problems that existed on the policy date but were missed, or could not be seen, in the public records. New York law describes it as insurance against loss from defective titles and encumbrances (claims against the property, such as liens). The state’s insurance regulator, the Department of Financial Services (DFS), gives fraud, forgery and unpaid property taxes as examples.
The title search and the policy are different things. The search, summed up in the title report, shows what is on record (see title search and title report). The policy pays when something the search missed causes a covered loss, and the insurer must defend you against covered claims at its own cost, under the standard owner’s policy form.
There is no yearly premium. DFS notes the buyer is generally responsible for both policies. For amounts, see what title insurance costs in NYC and Westchester. For the rest of the bill, see the New York title bill, line by line.
Owner’s policy vs lender’s policy
| Owner’s policy | Loan policy | |
|---|---|---|
| Protects | The buyer | The lender |
| Amount | Purchase price | Loan amount |
| Over time | Stays the same | Declines with loan |
| Lasts | While you own | While loan is owed |
| Required? | Optional | Lender requires it |
Who is protected. The loan policy covers only the lender’s mortgage. If a problem turns up after closing, the lender is covered and your equity is not.
How much coverage. The owner’s policy is written for at least the purchase price, or the fair market value if that is higher. The loan policy is written for the loan amount. DFS says owner’s coverage does not go down, while lender’s coverage “declines as the loan amount is reduced by mortgage payments.”
How long it lasts. Owner’s coverage lasts while you keep an interest in the property. It also continues after you sell in two cases: you lent your buyer part of the price and hold a mortgage from them, or you remain liable for promises about title you made when selling. Coverage passes to your heirs, to people who inherit under your will, to an estate planning trust you created and to a transfer on death beneficiary. It does not pass to a later buyer, who needs a new policy.
Required or optional. No New York law requires a buyer to buy title insurance. The loan policy is a lender requirement. Fannie Mae, for example, requires each loan to have a title insurance policy or an attorney’s title opinion letter (Fannie Mae Selling Guide).
Do I need owner’s title insurance?
It is optional, but the lender’s policy does nothing for you. When both policies are issued together, the loan policy is charged a reduced “simultaneous” rate, so the owner’s policy is most of the cost (see the worked examples in the cost guide). A cash buyer has no loan policy at all, so the owner’s policy is the only title protection.
What is covered and what is not
New York policies must be on forms filed with DFS (state insurance law). Since October 1, 2024, the TIRSA rate manual has used the national 2021 ALTA owner’s and loan policy forms. It adds TIRSA forms and New York endorsements (policy add-ons), such as the no-charge Standard New York Endorsement. Below is a general summary of the 2021 ALTA Owner’s Policy. Your actual coverage is the form plus its New York endorsements.
Covered risks include:
- Someone other than you owns the title.
- Liens and defects, including those caused by forgery, fraud, impersonation or a signer who lacked legal capacity, and unpaid real estate taxes.
- A defect that would let a buyer or lender back out of a deal (“unmarketable” title), and no legal right of access to the property.
- Earlier transfers in the chain of ownership being undone as fraudulent or as unfairly favoring one creditor over others (a “preferential” transfer), for example in a prior owner’s bankruptcy.
- Liens or other problems recorded after the policy date but before your deed is recorded (the “gap”).
Exclusions include:
- Zoning, building and land use laws, unless a notice of enforcement was recorded in the public records.
- Problems you created, agreed to, or knew about and did not disclose.
- Problems that arise after the policy date, and taxes that come due after it.
- Differences in square footage or acreage.
Property condition is not title. An open Department of Buildings (DOB) violation or a missing certificate of occupancy is generally handled through municipal searches and the contract, not the policy (see no certificate of occupancy in NYC).
Schedule A and Schedule B
Schedule A states who is insured, the amount of insurance, the policy date, the type of ownership insured, who holds title and the legal description of the property.
Schedule B lists the exceptions: specific things the policy does not cover. Examples are recorded easements (rights others have to use part of the property), covenants (recorded restrictions), survey matters and tenants’ rights. A problem found in the search and not cleared by closing usually ends up here, uninsured. Object when the title report arrives, not after the policy issues (see who does what at a New York closing and a lien or judgment found in the title search).
Who regulates title insurance
DFS licenses title insurers and agents and approves their rates and rules. Policy forms must be filed with DFS, and rates go through the state’s rate filing process (state insurance law). The Title Insurance Rate Service Association (TIRSA), licensed by DFS, files rates and forms for its member insurers. Premiums follow the filed manual and cannot be discounted, though an insurer may file an approved deviation from the rate (cost guide).
Extended and market value coverage
- Extended owner’s policy. TIRSA’s Owner’s Extended Protection Policy (OEPP) is for residential property insured to an individual, or to a living trust an individual created for estate planning. It costs 120% of the owner’s rate. Its 28 covered risks include forgery or impersonation that happens after the policy date and supplemental taxes for periods before the policy. They also include zoning, permit, subdivision and fence-encroachment risks, which come with deductibles and caps. The coverage amount rises 10% a year for five years, up to 150%. See market value and extended owner’s coverage.
- Market value coverage. State law requires insurers to offer optional owner’s coverage, at or before closing, for owner-occupied homes of up to four units. It insures the market value at the time a loss is discovered. DFS calls it a market value endorsement. Today this is the TIRSA Market Value Endorsement for owner-occupied one to four family homes, condo units and co-op apartments, and it costs 10% of the owner’s rate.
Decide on either option before the title report comes back so the right policy is ordered.
Car “title insurance” is unrelated
Title insurance here means real property only. A vehicle title is a DMV ownership record and has nothing to do with it.
Details for attorneys and title professionals
- Market value wording. The statute calls market value coverage an optional owner’s policy form. DFS calls it a market value endorsement. Both describe the same required offer.
- Withdrawn rider. The older Market Value Policy Rider, which could be attached only to the extended owner’s policy, was withdrawn on October 1, 2024, when the current TIRSA manual took effect. The extended owner’s policy itself is still offered.
- Rates and forms. Title insurers fall under their own article of the Insurance Law, and their rates go through the general rate filing process. The owner’s policy amount, the extended policy charge and the market value endorsement charge each come from a separate section of the TIRSA manual, listed below.
- Policy conditions. The duty to defend, how long coverage continues, and who counts as an insured (heirs, people who inherit under a will, an estate planning trust, a transfer on death beneficiary) are each set out in the conditions of the 2021 ALTA Owner’s Policy.
Official sources
- NY Insurance Law § 6401, definitions (§ 6401(b))
- NY Insurance Law Article 64, title insurance corporations
- NY Insurance Law § 6409, policy forms, rates (Article 23 filing), optional market value policy (§ 6409(a)-(c))
- NYS DFS, Title Insurance consumer page
- TIRSA Rate Manual, Seventh Revision, effective October 1, 2024 (Sections 2(C), 5 (policy amounts), 20 (OEPP, 120%), 33(D)(7) (Market Value Endorsement, 10%); Part IV)
- 2021 ALTA Owner’s Policy form (Covered Risks 1 to 10; Exclusions; Conditions 1.g, 2 and 5)
- Stewart Title bulletin NY000711, Seventh Revision
- Fannie Mae Selling Guide B7-2-01