Title insurance is one of the least understood — and most important — parts of a real estate transaction. Most buyers hear about it for the first time when they see it on their Closing Disclosure, and many sellers don't realize they may be paying for it.
This guide explains what title insurance actually is, why it's required, what it covers, who pays for it in Massachusetts and New Hampshire, and why it matters more than most people think.
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What Is Title Insurance?
Title insurance is a one-time insurance policy that protects against financial loss from defects in a property's title — meaning problems with the legal ownership of the property. Unlike homeowner's insurance (which protects against future events like fire or theft), title insurance protects against past eventsthat weren't discovered before closing.
Before you close on a property, your closing attorney conducts a title search — a review of public records going back decades to confirm that the seller legally owns the property and that no one else has a claim to it. Title insurance picks up where the search leaves off, covering issues that even the most thorough search might miss.
Owner's vs. Lender's Title Insurance
There are two types of title insurance policies, and understanding the difference is critical:
| Policy Type | Who It Protects | Required? | Coverage Amount |
|---|---|---|---|
| Lender's Policy | The mortgage lender | Yes (if financing) | Loan amount |
| Owner's Policy | The buyer/homeowner | No, but strongly recommended | Purchase price |
The lender's policyis required any time you're financing a purchase. It protects the bank's investment in the property — not yours. If a title issue surfaces after closing, the lender is covered, but you could lose your equity and your home without an owner's policy.
The owner's policyprotects you — the homeowner — for as long as you (or your heirs) own the property. It's a one-time premium paid at closing, and it covers the full purchase price. We strongly recommend it for every buyer.
Key Takeaway
The lender's policy protects the bank. The owner's policy protects you. Without an owner's policy, you're personally liable for any title defects discovered after closing.
What Title Insurance Covers
Title insurance protects against a surprisingly wide range of issues that can threaten your ownership:
- Unknown liens. A previous owner may have unpaid taxes, contractor liens, or judgments that attach to the property — even though you had nothing to do with them.
- Forgery and fraud.If a deed in the property's chain of title was forged, the sale to you could be challenged.
- Errors in public records. Clerical mistakes in recorded documents — misspelled names, incorrect legal descriptions, filing errors — can cloud your title.
- Missing heirs. If a previous owner died and an unknown heir later comes forward to claim ownership, title insurance covers the legal defense.
- Boundary and survey disputes.If your property's boundaries overlap with a neighbor's recorded lot, title insurance can cover the resolution.
- Undisclosed easements.A utility company, a neighbor, or a municipality may have a legal right to use part of your property that wasn't disclosed before closing.
- Improperly recorded documents. A prior mortgage release, deed, or lien satisfaction that was never properly recorded can create issues years later.
Who Pays for Title Insurance in Massachusetts vs. New Hampshire?
Payment customs differ between the two states:
- In Massachusetts, the seller typically pays for the buyer's owner's title insurance policy. The buyer pays for the lender's policy. This is customary — not legally required — and can be negotiated.
- In New Hampshire,the buyer more commonly pays for both the owner's and lender's policies, though this too is negotiable depending on the transaction.
Regardless of who pays, your closing attorney will clearly outline all title insurance costs on the settlement statement well before closing day.
How Much Does Title Insurance Cost?
Title insurance premiums are regulated in Massachusetts and based on the property's purchase price or loan amount. Here are typical ranges:
| Purchase Price | Owner's Policy | Lender's Policy |
|---|---|---|
| $300,000 | $1,000 – $1,500 | $800 – $1,200 |
| $500,000 | $1,500 – $2,500 | $1,200 – $2,000 |
| $750,000 | $2,000 – $3,500 | $1,500 – $2,800 |
| $1,000,000 | $2,500 – $4,500 | $2,000 – $3,500 |
These are approximate ranges. Simultaneous issue discounts — where both policies are purchased at the same time — can significantly reduce the combined cost.
Why Title Insurance Matters More Than You Think
Title claims are rare — but when they happen, they can be devastating. A single undiscovered lien can cost you tens of thousands of dollars. A forgery in the chain of title can threaten your entire ownership. And without title insurance, you're personally responsible for the legal fees to defend your claim — even if you did nothing wrong.
Title insurance is one of the lowest-cost, highest-value protections in real estate. It's a one-time payment that covers you for as long as you own the property. Compared to the cost of the home itself, it's a small price for permanent peace of mind.
A thorough closing cost breakdown will always include title insurance as a key line item — make sure you understand what you're getting.
Have Questions About Title Insurance?
At Touchstone Closing & Escrow, we explain every closing cost — including title insurance — in plain language before you sign anything. Serving buyers and sellers across Massachusetts and New Hampshire.