Title insurance protects a property owner or a mortgage lender against loss from defects in title that already exist when the policy is issued: a forged deed in the chain of ownership, an unpaid lien, a recording error, an heir nobody accounted for. You pay for it once, at closing. In New York there are two main policies. The owner’s policy protects the buyer. The loan policy, often called the lender’s policy, protects the mortgage lender. A lender will require the loan policy; the owner’s policy is the buyer’s choice.
The rules below are statewide. They apply the same way in New York City, Westchester County and the rest of New York State.
What title insurance insures
Most insurance covers future events. Title insurance looks backward, at ownership problems that existed on the policy date but were missed, or could not be seen, in the public records. New York law describes a title insurance policy as one insuring owners and others with an interest in real property against loss from encumbrances and defective titles (Insurance Law § 6401(b)). The Department of Financial Services (DFS) gives fraud, forgery and unpaid real property taxes as examples.
The title search and the policy are different things. The search, summarized in the title report, shows what is on record (see title search and title report). The policy pays when something the search missed causes a covered loss, and the insurer must also defend the insured against covered claims at its own cost (2021 ALTA Owner’s Policy, Condition 5).
There is no annual premium. The premium is paid once at closing, and DFS notes the buyer is generally responsible for both policies. For amounts, see what title insurance costs in NYC and Westchester; for the rest of the bill, see the New York title bill, line by line.
Owner’s vs lender’s title insurance
| Owner’s policy | Loan policy | |
|---|---|---|
| Protects | The buyer | The lender |
| Amount | Purchase price | Loan amount |
| Over time | Stays the same | Declines with loan |
| Lasts | While you own | While loan is owed |
| Required? | Optional | Lender requires it |
Who is protected. The loan policy covers only the lender’s mortgage. If a title defect surfaces after closing, the lender is covered and the buyer’s equity is not.
Coverage amount. The owner’s policy is written for at least the purchase price, or fair market value if higher; the loan policy for the loan amount (TIRSA Rate Manual Section 5). DFS states that owner’s coverage does not decline, while lender’s coverage “declines as the loan amount is reduced by mortgage payments.”
Duration. Under the 2021 ALTA Owner’s Policy, coverage continues while the insured keeps an interest in the land, holds a purchase money mortgage from the buyer, or remains liable on warranties given in a sale (Condition 2). Coverage passes to heirs and devisees, to an estate planning trust the insured created, and to a transfer on death beneficiary (Condition 1.g). It does not pass to a later buyer, who needs a new policy.
Required vs optional. No New York statute requires a buyer to buy title insurance. The loan policy is a lender requirement: Fannie Mae, for example, requires each loan to have a title insurance policy or an attorney title opinion letter (Selling Guide B7-2-01).
Do I need owner’s title insurance?
It is optional, but the lender’s policy does nothing for you. When both policies are issued together, the loan policy is charged a reduced simultaneous rate, so the owner’s policy is most of the cost (see the worked examples in the cost guide). A cash buyer has no loan policy at all, so the owner’s policy is the only title protection.
What is covered and what is excluded
New York policies must be on forms filed with DFS (Insurance Law § 6409(a)). Since October 1, 2024, the TIRSA Rate Manual (Seventh Revision) has used the 2021 ALTA owner’s and loan forms, alongside TIRSA forms and New York endorsements such as the no-charge Standard New York Endorsement (Stewart bulletin NY000711). The summary below follows the 2021 ALTA Owner’s Policy in general terms. Your actual coverage is the policy form plus its New York endorsements.
Covered risks include:
- Title vested in someone other than the insured.
- Liens and defects, including those caused by forgery, fraud, impersonation or incapacity, and unpaid real estate taxes.
- Unmarketable title, and no legal right of access.
- Earlier transfers in the chain set aside as fraudulent or preferential, for example in a prior owner’s bankruptcy.
- Matters recorded after the policy date but before the deed is recorded (the “gap”).
Exclusions include:
- Zoning, building and land use laws, unless an enforcement notice was recorded in the public records.
- Matters the insured created, agreed to, or knew about and did not disclose.
- Matters arising after the policy date, and taxes that become due after it.
- Differences in square footage or acreage.
Property condition is not title. An open DOB violation or a missing certificate of occupancy is generally handled through municipal searches and the contract, not the policy (see no certificate of occupancy in NYC).
Schedule A and Schedule B
Schedule A states the insured, the amount of insurance, the policy date, the estate insured, who holds title and the legal description.
Schedule B lists the exceptions: specific matters the policy does not cover, such as recorded easements, covenants, survey matters and tenants’ rights. An item found in the search and not cleared before closing usually ends up here, uninsured. The time to object is when the title report arrives, not after the policy issues (see who does what at a New York closing and a lien or judgment found in the title search).
How New York regulates title insurance
DFS licenses title insurers and agents and approves rates and rules. Title insurers are governed by Insurance Law Article 64; § 6409 requires policy forms to be filed and makes rates subject to Article 23 filing. The Title Insurance Rate Service Association (TIRSA), a DFS-licensed rate service organization, files rates and forms for its member insurers. Premiums follow the filed manual and cannot be discounted, though an insurer may file an approved deviation (cost guide).
Extended and market value coverage
- TIRSA Owner’s Extended Protection Policy (OEPP). For residential property insured to a natural person, or a living trust a natural person created for estate purposes, at 120% of the owner’s rate (TIRSA Rate Manual Section 20). It adds coverage beyond the standard owner’s policy; ask to see the form, including any deductibles or dollar limits, before choosing.
- Market value coverage. Insurance Law § 6409(c) requires insurers to offer, at or before closing, an optional owner’s form for owner-occupied homes of up to four units that insures market value when a loss is discovered. DFS describes it as a market value endorsement. Under the Seventh Revision this is the TIRSA Market Value Endorsement for owner-occupied one to four family homes, condo units and co-op apartments, charged at 10% of the owner’s rate (Section 33(D)(7), per an underwriter’s 2024 endorsement pricing chart). The older Market Value Policy Rider, which attached only to the OEPP, was withdrawn on October 1, 2024 (Stewart bulletin NY000711).
Decide on either option before the title report comes back so the right policy is ordered.
Car “title insurance” is unrelated
Title insurance here means real property only. A vehicle title is a DMV ownership record and has nothing to do with it.
Official sources
- NY Insurance Law § 6401, definitions
- NY Insurance Law § 6409, policy forms, rates, optional market value policy
- NYS DFS, Title Insurance consumer page
- TIRSA Rate Manual, Seventh Revision, effective October 1, 2024 (Sections 2(C), 5, 20, 33; Part IV)
- 2021 ALTA Owner’s Policy form
- Stewart Title bulletin NY000711, Seventh Revision
- Stewart Title 2024 New York endorsement pricing chart (underwriter summary of manual charges)
- Fannie Mae Selling Guide B7-2-01