Lender's Policy vs. Owner's Policy

Title insurance isn't one policy, it's two, and they protect completely different people. Understanding which is which matters more than most buyers expect going in.

The Consumer Financial Protection Bureau explains that a lender's policy protects your mortgage lender against title problems, not you. It's generally required if you're financing your purchase, and it does nothing to protect the equity you're putting into the home.

That's a real gap worth understanding before you assume you're automatically covered. Many buyers hear "title insurance" once at closing and assume one policy handles everything.

The CFPB's companion explainer on owner's title insurance covers the second policy, the one that actually protects your investment. It's optional, but declining it means you'd bear the full cost yourself if a past ownership problem surfaced later.

Unlike homeowners insurance, which protects against things that might happen after you move in, title insurance generally protects against covered title problems arising from matters that existed before you bought the home, whether or not anyone involved in the sale knew about them. That includes things like a previous owner's unpaid taxes, a contractor who claims they were never paid for work done years before your purchase, a forged signature somewhere in the chain of ownership, or a simple clerical error in the public record.

It's a one-time premium paid at closing rather than a recurring bill, and an owner's policy generally stays in effect for as long as you or your heirs hold an interest in the property. That premium is one of several closing costs worth budgeting for ahead of time. My guide to closing costs in Nevada covers the other categories of fees you'll see on the same statement.

Who pays for which policy isn't set by statute. It's regional custom, and it genuinely varies from state to state, which catches a lot of buyers and sellers relocating from elsewhere off guard.

According to Fidelity National Title's published reference on real estate customs by state, the customary practice in Nevada has sellers paying the owner's policy premium while buyers pay the lender's policy premium. That's the common starting point in most Southern Nevada transactions, not a rule written into the sale itself.

Because it's custom rather than law, none of this is fixed. It gets settled in the purchase agreement itself, not assumed automatically, and either side can propose something different during negotiations.

That premium still moves through the same account that holds the rest of your transaction funds. My guide to how escrow works in Nevada covers how that account handles this and every other closing cost.

The two get confused constantly, partly because both show up during the same transaction and both have "insurance" in the name. Homeowners insurance covers future events, like fire, storm damage, or theft, and you pay for it annually for as long as you own the home.

Title insurance runs the opposite direction entirely: it covers events from before your purchase, paid once, and it protects your ownership rather than your physical property. Neither one is a substitute for the other, and most lenders require both before they'll fund your loan.

Title insurance is easy to overlook until the moment it actually matters, which is exactly why it's worth understanding well before you're sitting at the closing table. The same is true of most of what happens in the final stretch of a purchase.

The days right before that closing table matter too, separate from anything covered here. My guide to the final walkthrough before closing in Nevada covers what to check right before you get there.

None of this replaces having your financing sorted out well ahead of time, either. That step tends to shape how smoothly everything after it goes.

My guide to pre-approval versus pre-qualification covers what to understand about financing before you're anywhere near a closing date. Getting that piece settled early tends to make everything downstream easier.

If you're relocating rather than buying locally, title insurance customs are just one of many things that work differently than wherever you're coming from. Getting familiar with the differences ahead of time avoids surprises later.

My Las Vegas Valley relocation checklist covers the rest of what to plan around, from utility setup to settling in. It's worth reading well before your move date, not after.

Not everyone reading this is buying, either. Sellers deal with much of this same territory, just from the other direction.

If you're selling, understanding which title costs are customarily yours to cover helps you budget accurately from the start. My Seller's Guide for Las Vegas and Henderson covers that side of the process.