What Happens If You Need to File a Title Insurance Claim?

When Title Insurance Claims Arise

While title insurance claims are relatively uncommon—thanks to thorough title searches conducted before closing—they do occur. When a covered title defect is discovered after you've purchased your home, your title insurance policy becomes your financial safety net. Understanding the claims process before you need it ensures you can act quickly and effectively if a problem arises.

This guide explains common claim scenarios, walks you through the claims process step by step, and clarifies what to expect from your title insurance company when you need their help.

Why Title Insurance Claims Are Rare But Important

Title insurance is unique among insurance products. Unlike auto or health insurance where claims are expected and common, title insurance relies on prevention. The title search conducted before your purchase is designed to find and resolve problems before closing, significantly reducing the likelihood of post-closing claims.

However, some issues escape detection despite thorough searches:

• Forgeries that are nearly impossible to detect
• Recording errors in the public records system
• Unknown heirs who weren't discovered during the search
• Fraud in the property's history
• Mistakes in legal descriptions

When these hidden problems emerge, title insurance provides the protection you paid for at closing. Learn more about what title insurance covers in What Is Title Insurance?

Common Title Insurance Claim Scenarios

Title claims can arise from various situations. Understanding common scenarios helps you recognize when to contact your title company:

Unknown Heirs Claiming Ownership

You purchased property from an estate, and years later, a previously unknown heir emerges claiming they have a legal right to the property. Perhaps they were an illegitimate child, a relative who wasn't located during probate, or someone who claims the will was invalid. These claims can threaten your ownership even though you purchased in good faith.

Undiscovered Liens

A lien that should have been found during the title search—but wasn't—surfaces after closing. This might be:

• A mechanic's lien from work done before you purchased
• A judgment lien against a previous owner
• An IRS or state tax lien
• An HOA lien that wasn't properly recorded

For more on liens, see Property Liens: What Buyers Need to Know.

Forgery or Fraud in the Chain of Title

Someone in the property's ownership history forged a signature on a deed, or a fraudulent transaction occurred. Examples include:

• A forged deed transferring property without the owner's knowledge
• Someone impersonating a property owner to sell their property
• Fraudulent satisfaction of a mortgage that was never actually paid

Recording Errors

Mistakes in the public records system create problems with your title. These might include:

• Incorrect legal descriptions
• Misspelled names that break the chain of title
• Improperly indexed documents
• Missing signatures or notarizations

Learn more in Recording Errors and Your Title.

Boundary and Survey Issues

Certain boundary-related claims may be covered, such as:

• Encroachments discovered after purchase
• Incorrect property descriptions affecting what you actually own
• Survey errors that create title issues

See Boundary Disputes for more information.

Easement Issues

Undisclosed easements that affect your property use may be covered if they should have been discovered during the title search. Learn about easements in Easements and Your Property Rights.

Steps to File a Title Insurance Claim

If you discover a potential title issue, follow these steps:

Step 1: Gather Documentation

Collect all relevant documents:

• Your owner's title insurance policy
• Any correspondence or documents related to the claim
• Legal notices you've received
• Your closing documents including the deed
• Any other supporting materials

Step 2: Contact Your Title Insurance Company Promptly

Notify your title insurance company as soon as you become aware of a potential claim. Most policies require prompt notice—waiting too long could affect your coverage. You'll find claims contact information in your policy or on the title company's website.

Step 3: Submit a Written Claim

Provide a written description of the claim including:

• Property address and policy number
• Detailed description of the issue
• When you discovered the problem
• Any parties involved in the claim
• Copies of all relevant documents

Step 4: Work with the Claims Handler

The title company will assign a claims professional to your case. They'll:

• Review your claim and policy coverage
• Investigate the issue
• Determine if the claim is covered
• Develop a resolution strategy

Step 5: Cooperate in the Resolution

Your policy requires cooperation in resolving claims. This might include:

• Providing additional documentation
• Participating in legal proceedings if necessary
• Not admitting liability without the insurer's consent
• Keeping the title company informed of developments

What Title Insurance Typically Covers

Legal Defense

One of the most valuable aspects of title insurance is legal defense coverage. If someone challenges your ownership, the title company provides and pays for attorneys to defend your title. Given that real estate litigation can cost tens of thousands of dollars, this coverage alone can exceed the cost of your premium many times over.

Claim Resolution

The title company may pay to resolve valid claims against your property. This could include:

• Paying off liens that shouldn't exist
• Negotiating with claimants
• Clearing title defects

Loss Payment

If a covered claim results in actual loss—including loss of the property itself—the title company may compensate you up to your policy amount. This ensures you don't lose your entire investment due to title problems that weren't your fault.

What Title Insurance Typically Doesn't Cover

Understanding exclusions helps set appropriate expectations:

Known Issues

Problems disclosed in your preliminary title report (listed as exceptions) aren't covered. You knew about them before purchase.

Post-Policy Matters

Issues arising after your purchase date generally aren't covered. Title insurance protects against past defects, not future problems.

Government Actions

Zoning changes, building code violations you create, or government takings through eminent domain typically aren't covered.

Environmental Issues

Contamination and environmental problems usually aren't covered by standard title policies.

Items Requiring Inspection

Physical conditions that a survey or inspection would reveal may not be covered if you didn't get a survey.

Tips for a Smooth Claims Experience

Keep Your Policy Accessible

Store your title insurance policy with your important documents where you can find it quickly if needed.

Act Quickly

Don't delay reporting potential claims. Prompt notice protects your coverage and allows faster resolution.

Document Everything

Keep records of all communications, notices, and documents related to the issue.

Be Honest and Complete

Provide accurate, complete information to your title company. Incomplete or misleading information can complicate your claim.

Follow Professional Advice

Work with the title company's claims team and any attorneys they assign. Don't take independent action that could harm your case.

Owner's vs. Lender's Policy Claims

Remember that if you only have a lender's policy (no owner's policy), claims protection is limited:

• The lender's policy only protects the lender's interest
• Your equity and down payment aren't protected
• If the lender's loan is paid, they have no further interest to protect

This is why we strongly recommend owner's title insurance for every buyer. Learn the difference in Owner's vs. Lender's Title Insurance.

The Bottom Line

Title insurance claims are uncommon, but when they occur, your policy provides essential protection. Understanding the claims process ensures you can respond effectively if a problem arises. The key is to act promptly, provide complete documentation, and work cooperatively with your title insurance company.

If you're facing a potential title issue, don't panic. Contact your title company promptly, gather your documentation, and let the professionals guide you through the resolution process. That's exactly what your title insurance premium paid for.