Is the Owner's Title Insurance Policy Worth It in North Carolina?
Your lender requires their title policy. Yours is optional. So is it worth a few hundred dollars to protect potentially hundreds of thousands in equity?
Josh Oliver
Founder, Rhythmic Title Company
The two policies, again
At an NC closing, two title policies are usually on the table:
- Lender's policy, required by your lender, paid by you, protects the lender up to the loan amount.
- Owner's policy, optional, paid by you (often by the seller depending on contract), protects you up to the purchase price.
The lender's policy does not protect you. If a covered defect surfaces and you don't have an owner's policy, your lender is made whole and you absorb the loss.
What you're actually paying for
The owner's policy is a one-time premium that lasts for as long as you (or your heirs) own the home. There are no renewals. For a typical NC purchase, the owner's policy costs a few hundred to a couple thousand dollars depending on price.
For that one-time payment, you get:
- Defense costs if anyone challenges your title
- Indemnification for losses up to the purchase price
- Coverage for hidden defects no search could have caught, forgery, undisclosed heirs, fraud in a prior conveyance, recording errors
The "but the attorney certified title" question
This is the most common reason buyers consider skipping the owner's policy: "If the attorney certified title, what could go wrong?"
A lot, actually. Title certifications cover what the public record shows. They don't cover:
- A forged deed from 30 years ago that everyone treated as legitimate
- A prior owner who was secretly married, making a transfer defective
- An heir who wasn't disclosed in a probate
- A recording error in another county that affects this chain
- Identity theft on a prior conveyance
- Misindexed liens that the search missed
The attorney's certification triggers the policy; the policy is what actually pays if something the certification couldn't catch comes to light.
When skipping might be defensible
Some buyers consider skipping in narrow cases:
- Cash purchases of newly subdivided land with a clean recent search
- Intra-family transfers where title history is well known
- Properties with extremely low values where the premium isn't proportionate
Even in these cases, we usually recommend the policy. The cost-to-coverage ratio is one of the best in insurance.
When you absolutely should buy it
- Any purchase financed with a mortgage
- Any purchase where the chain of title is older or messier
- Foreclosure or REO purchases
- Purchases involving estates, divorces, or out-of-state sellers
- New construction where mechanic's lien risk is real
The bottom line
We've seen owner's policy claims pay for legal defense against decade-old fraud, undisclosed heirs, and title errors no one could have predicted. The premium is small; the protection is meaningful. We recommend the owner's policy on virtually every purchase.
Frequently asked questions
- Is the owner's title policy required in North Carolina?
- No. Lenders require a lender's policy, but the owner's policy is optional. It is strongly recommended on essentially every purchase because the lender's policy protects only the lender, not the buyer's equity.
- If the closing attorney already certified title, why do I still need an owner's policy?
- A title certification only covers what the public record shows. The owner's policy covers hidden defects a search cannot catch, forged deeds in the chain, undisclosed heirs, identity theft on a prior conveyance, misindexed liens, and similar issues, and pays the legal defense if any of them are challenged.
- How much does an owner's title policy cost in NC?
- Premiums are filed with the NC Department of Insurance and scale with purchase price. For most homes the incremental cost above the lender's policy runs from a few hundred dollars to a couple thousand, paid one time at closing.
- How long does an owner's title policy last in North Carolina?
- It stays in force for as long as you or your heirs own the property. There is no renewal premium and no expiration date.
- Does the owner's policy pay for legal defense costs?
- Yes. If a covered title claim is brought against you, the title insurance underwriter pays the legal defense in addition to any covered loss, often the most valuable part of the policy.