Homeowners insurance is insurance that covers a homeowner in the event of damage to their property. Title insurance is insurance that protects the lender or buyer in the event that the title to the property is not valid. Homeowners insurance does not cover the title to the property, and title insurance does not cover damage to the home.
What is Not Covered by Title Insurance or Homeowners Insurance?
If your home were to sustain major damage, you would not be able to file a claim with your title insurer. It’s important to be familiar with what each type of policy covers so that you can purchase the appropriate coverage for your needs.
There are a few things that are generally not covered by either title insurance or homeowners insurance. Examples include:
- Flood damage
- Sewer backup
- Termite damage
- Foundation problems
When Are Homeowners Insurance and Title Insurance Both Needed?
Homeowners insurance is required when you have a mortgage. A title insurance policy is not required, but it is recommended. You need both types of insurance to be fully protected.
What Are the Costs Typically Associated With Homeowners and Title Insurance?
The costs typically associated with homeowner’s insurance are premiums, deductibles, and co-insurance. The costs typically associated with title insurance are the premium and policy limit.
Homeowners Insurance
The average homeowners insurance cost in the United States in 2022 is $1,383 per year for a policy with $250,000 in dwelling coverage.
The average cost of homeowners insurance in Florida is $1,648 per year for a $250,000 dwelling coverage policy. This is about 19% higher than the national average premium of $1,383 per year for the same amount of coverage.
On average, the most expensive states for homeowners insurance in 2022 are Oklahoma, Nebraska, and Kansas, while the least expensive states are Hawaii, Utah, and Vermont.
Title Insurance
The price varies from $500-$1,500, depending on several factors. Besides the premium thresholds set by the Florida State Government, some factors determine the cost of your title insurance. For instance, if your property costs $100,000, your title insurance policy will be $575.
The latest promulgated rates:
- $5.75 for every $1,000 of liability not more than $100,000
- Extra $5.00 for every $1,000 of liability from $100,000-$1,000,000
- Extra $2.50 for every $1,000 of liability from $1,000,000-$5,000,000
- Extra $2.25 for every $1,000 of liability from $5,000,000-$10,000,000
- Extra $2.00 for every $1,000 of liability exceeding $10,000,000
Some closing costs that may add up to your title cost include:
- Title Search Costs – Your insurer may charge $100 for the search.
- Simultaneous Issue Costs – If you take a lender’s and owner’s insurance policy simultaneously, simultaneous issue charges may apply. The rates are $5.75 for every $1,000 up to $100,000 and $5.000 for every $1,000 up to a maximum of $1,000,000.
- Reissue Rate – Reissue rates might apply if the previous property owner had a title policy. The minimum issuance cost is $100.
Key takeaways:
- The cost of homeowner’s insurance can vary depending on the coverage you choose, but it typically includes the above-mentioned.
- The cost of title insurance is usually just the premium and policy limit.
- Homeowner’s insurance is generally more expensive than title insurance.
What to Do if You Can’t Afford Both?
When it comes to protecting your home, there are two main types of insurance to consider: homeowner’s insurance and title insurance. Homeowner’s insurance protects your home from damage or destruction, while title insurance policy protects your ownership rights to the property. So, which one do you need?
If you can’t afford both homeowner’s insurance and title insurance, prioritize based on what provides the most protection for your situation. If you own your home outright and don’t have a mortgage, title insurance may not be necessary.
However, if you have a mortgage, your lender will likely require title insurance. In this case, you may need to choose between title insurance and homeowners insurance depending on which one provides the most coverage for your needs.
Why People Often Confuse Them
People often confuse homeowners insurance and title insurance because they both protect against potential loss. However, the coverage they provide is quite different.
Homeowner’s insurance covers your home and personal belongings in the event of:
- Fire
- Theft
- Vandalism, or other disasters
- Liability coverage if someone is injured on your property
Title insurance, on the other hand, protects you from financial losses if there are any problems with the title to your property. This includes things like:
- Unpaid mortgages
- Zoning issues
- Hidden liens
Deals for Homeowners Insurance and Title Insurance in Florida
There might be room to negotiate deals for homeowners insurance and title insurance in Florida, depending on the provider. For example, some title companies will give a discount if you also purchase homeowners insurance from them. It’s always worth checking to see if there are any discounts or deals available.
Additionally, your mortgage lender may require you to have both homeowners insurance and title insurance. If this is the case, they will usually arrange for the title insurance policy and add the cost to your closing costs. You can then shop around for the best deal on homeowners insurance.
So, while you may not technically need both types of insurance, it’s likely that you’ll end up with both if you’re buying a home in Florida.
You’re in Great Hands with Galaxy Title & Escrow
When you purchase a home, you want to be sure that you are getting title insurance. Title insurance protects you in the event that someone else claims ownership of your home. Homeowners’ insurance does not provide this protection.
A title insurance policy will also pay for any legal fees that you incur if someone challenges your ownership of the home. Galaxy Title & Escrow is the best place to get title insurance in Fort Lauderdale because we have a team of experienced title professionals who will work with you to ensure that you are getting the best possible coverage. Contact us today to learn more about our title insurance services.
Mitchell has been a licensed attorney since 2014 and has practiced in both the transactional and litigation fields of law. His experience allows him to approach every transaction with a depth of knowledge and practical experience most attorneys do not possess. Mitchell prides himself on providing top notch service to his clients.