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When you buy a home, you’re buying the land, house or any physical structures on the property. More importantly, you’re purchasing the legal rights of ownership of the property referred to as “title”, which are evidenced by the deed to the property.

The deed of the property states that you own the property and that it has been legally transferred to you from its previous owner. It’s an official record of your ownership that states your rights while you own the property, and those rights are what you transfer if you sell it in the future.

Here are three reasons you need title insurance to protect yourself during the home buying process:

It protects you from the mistakes and oversights of others
Unlike most insurance policies, title insurance protects the insured against things that may have happened in the past. During the closing process, your title agency will do thorough research and confirmation that the title for your house has been transferred legally, from one owner to the next, since the beginning of the property’s existence. Liens, unpaid taxes or errors during previous title transfers could mean the house was never legally transferred to the person selling it you. Consequently, they can’t legally sell it to you and you can’t legally own it until the title is cleared. Title insurance, in addition, covers monetary loss or loss of ownership rights from unsettled lawsuits, claims of unknown heirs or other defects in the title of the property.

It’s mandatory
If you need a mortgage, you’ll most likely need Lender’s title insurance. Most lenders require borrowers to purchase title insurance that insures them against losses from title defects. This protection covers up to the amount of the mortgage loan and lasts until the loan is repaid by the owner. Separate from lender’s title insurance, Owner’s title insurance will probably not be required by the lender, but it is what protects the homeowners in the event of legal costs or loss associated with unknowns, discussed above, from the title transfer process.

It’s indefinite
Paid in a one-time premium, title insurance lasts as long as the owners or their heirs hold ownership of the property title. Title insurance will protect the homeowners from title-related legal costs and losses, as described above, until ownership and the title is transferred to another party.