In Florida, a lender's title insurance policy protects the mortgage lender's loan, while an owner's title insurance policy protects you, the buyer, and your equity in the property. Most lenders require the lender's policy. The owner's policy is usually optional, but it is the only one of the two that protects your ownership if a covered title problem from before your purchase comes to light later.
What title insurance protects against
Before closing, the title agent searches public records for liens, judgments, unpaid taxes, recorded easements and breaks in the chain of ownership. That title search finds what is recorded. Title insurance exists for what a search cannot catch, or what was recorded incorrectly.
According to the Consumer Financial Protection Bureau, claims can come from a previous owner's failure to pay taxes or from contractors who say they were never paid for work done before you bought the home. Other common examples include:
- A forged signature on an earlier deed
- Errors in public records or in a legal description
- An heir of a prior owner who was never accounted for
- A mortgage or lien that was paid off but never formally released
Premier Title Solutions issues both owner's and lender's title insurance policies for Florida closings, and every policy is backed by a title examination before closing.
Lender's title insurance: protecting the loan
If you finance your purchase, your lender will almost always require a lender's policy. The CFPB explains that this policy protects the lender against title problems, but it does not protect your investment in the home.
Key points about the lender's policy:
- It covers the amount of the loan, not your down payment or equity.
- Its protection generally declines as the loan is paid down.
- It names the lender, not you, as the insured party.
In other words, if a covered claim arises, the lender's policy is there to protect the bank's interest. You are still the owner facing the claim.
Owner's title insurance: protecting your equity
An owner's policy names you as the insured. It is typically issued for the purchase price, is paid for with a one-time premium at closing, and generally remains in effect for as long as you or your heirs own the property.
If a covered claim is made against your title, an owner's policy can pay for your legal defense and cover your financial loss up to the policy amount, subject to the policy's terms and exceptions. For most buyers, the home is their largest single asset, which is why many agents and attorneys recommend the owner's policy even when it is optional.
Owner's vs. lender's policy at a glance
| Owner's policy | Lender's policy | |
|---|---|---|
| Who it protects | You, the buyer (and your heirs) | Your mortgage lender |
| Coverage amount | Usually the purchase price | Usually the loan amount |
| Required? | Usually optional | Usually required for a mortgage |
| How long it lasts | Generally as long as you or your heirs own the property | Until the loan is paid off or refinanced |
| Premium | One-time, paid at closing | One-time, paid at closing |
| Cash purchase | Your only title protection | Not issued (no lender) |
Who pays for title insurance in Florida?
There is no single statewide rule. Who pays for the owner's policy follows local custom, and it varies by county. In Miami-Dade and Broward counties, the buyer customarily pays for the owner's policy, while in many other Florida counties the seller customarily pays. In every county, the purchase contract controls, and buyers and sellers can negotiate a different arrangement.
Two Florida-specific points are worth knowing:
- Premiums follow a state-set schedule. Florida title insurance premium rates are set by rule (Florida Administrative Code Rule 69O-186.003), so the premium for a given policy amount follows the same schedule. Other closing charges, such as search and settlement fees, can differ, so review the full fee breakdown.
- Buying both policies together. When an owner's policy and a lender's policy are issued at the same closing, the lender's policy is issued at a simultaneous-issue rate. The CFPB notes that using the same provider for both usually costs less overall than buying them separately.
If you are unsure what your contract says about title insurance, ask your agent or attorney before you sign.
Do you need owner's title insurance for a cash purchase?
A cash buyer has no lender, so no lender's policy is issued. That makes the owner's policy the only title insurance protecting the purchase. Cash buyers, including investors and buyers purchasing from abroad, often have the most at stake if a hidden title issue appears after closing, because there is no lender with a parallel interest in resolving it.
How to review your title commitment
Before closing, you will receive a title commitment: the title insurer's promise to issue a policy once listed conditions are met. Use these steps to review it:
- Check the names and property. Confirm the buyer names, seller names and legal description match your contract.
- Read the requirements. These are items that must be completed before closing, such as paying off an existing mortgage or recording a release.
- Read the exceptions. These are matters the policy will not cover, such as recorded easements or condominium declarations. Ask about any you do not understand.
- Ask about endorsements. Some situations call for additional coverage added to the policy.
- Raise questions early. Issues are easier to resolve weeks before closing than on closing day.
Want to know what a policy would cost for your purchase? You can request a title insurance quote online. And because closing funds are a common target for criminals, take a few minutes to read our guide on protecting your closing funds from wire fraud.
Frequently asked questions
Is owner's title insurance required in Florida?
No. Florida does not require buyers to purchase an owner's title insurance policy. Lenders typically require a lender's policy when you take out a mortgage, but the owner's policy is optional. Because it is the only policy that protects the buyer's equity against covered past title defects, many buyers choose to purchase it.
Who pays for title insurance in Miami-Dade and Broward?
In Miami-Dade and Broward counties, the buyer customarily pays for the owner's title insurance policy. Custom is not law, though. The purchase contract determines who pays, and the buyer and seller can negotiate a different arrangement. Review the title insurance section of your contract with your agent or attorney.
Do I need title insurance if I pay cash?
It is not required, but a cash buyer has no lender's policy, so an owner's policy is the only title insurance protecting the purchase. If a covered claim from before your purchase surfaces later, the owner's policy can cover legal defense and financial loss up to the policy amount, subject to its terms.
How long does owner's title insurance last?
An owner's policy is paid for once at closing and generally stays in effect for as long as you or your heirs hold title to the property. It does not need to be renewed. Coverage applies to covered title defects that existed before the policy date, not to problems created after you buy.
Ready to plan your closing?
Every closing is different, and this article is general information, not legal advice. For questions about your specific purchase or contract, consult your attorney or closing agent. When you are ready to talk through title insurance for your transaction, contact our Aventura office. Our team assists clients in English, Spanish, Russian and French.