Title insurance protects you and your lender if someone challenges your title to your property because of title defects that were unknown when you bought the policy.
Most lending institutions will not loan money to purchase a house or other property unless you buy a Loan Policy of Title Insurance. This policy protects the lender's investment by paying the mortgage (loan amount) if a title defect voids your title. When you buy a house, the title company also issues an owner's policy, unless you reject it in writing. The owner's title policy protects you against the covered risks set out in the policy. Read your policy carefully. Check the title policy's legal description of your land against your survey and your earnest money contract before the closing. Your title policy tells you how to file a claim and describes your coverage, including limitations, exclusions, exceptions, and special conditions.
In Texas, the two most commonly sold title policies are the Loan Policy of Title Insurance and the Owner's Title Policy. The form language in Texas title policies is determined by the state; title companies may sometimes describe their particular exceptions to your coverage differently, however. Therefore, you should read your title commitment and title policy carefully.
All title companies charge the same rates for title policies, which are set by TDI (Texas Department of Insurance). You pay a premium only once, at closing. The buyer and seller should negotiate who pays the premium for an owner's title policy.