Owner’s vs. Lender’s Title Insurance: What Tennessee Buyers Need to Know

At a Tennessee closing you’ll often see two title insurance policies on your settlement statement: a lender’s policy and an owner’s policy. They sound similar, but they protect very different people.

The lender’s policy

If you’re financing your purchase, your lender will almost always require a lender’s policy. It protects the lender’s interest in the property up to the loan amount. As you pay down your mortgage, the coverage effectively shrinks, and it ends when the loan is paid off. Importantly, it does not protect you.

The owner’s policy

An owner’s policy protects your equity — typically up to the purchase price — for as long as you or your heirs own the property. If a covered title defect surfaces years later, the policy can pay for legal defense and covered losses. Examples include:

• A forged signature on a prior deed
• An heir who was never accounted for in an earlier estate
• Recording or indexing mistakes in county records
• A previous owner’s lien that was never properly released

One premium, long-term protection

Unlike homeowners insurance, title insurance is paid once, at closing. There are no monthly premiums. When a lender’s and owner’s policy are issued together, they’re usually priced more efficiently than buying either one separately.

Who pays in Memphis?

Who pays for each policy is negotiable and set by your purchase contract. In the Memphis market it’s common for the seller to pay for the owner’s policy and the buyer to pay for the lender’s policy, but your contract controls. Your Realtor® can explain what’s customary for your deal.

Is an owner’s policy really necessary?

It’s optional — but it’s the only coverage that protects your ownership against covered title problems. Considering it’s a one-time cost on what is usually the largest purchase of your life, most buyers choose to have it.

Our underwriters

Sure Title issues policies through Fidelity National Financial (FNF National Agency) and First American Title Insurance Company — two of the largest, most financially stable title insurers in the country.

Related: Title Insurance · FAQ · Closing Services

This article is general information, not legal, tax, or financial advice. Every transaction is different — consult your attorney, lender, or tax professional about your situation.