Definition
A one-time policy bought at closing that protects against defects in a home's ownership history: forged deeds, unknown heirs, unpaid liens from prior owners. Lenders require a policy protecting the loan; an owner's policy protecting your equity is optional but standard.
Why it matters
A title problem can surface decades after purchase and cost far more than the premium ever did. The owner's policy is the piece buyers are tempted to skip, and it is the one that protects their own money.
Example
A buyer of a $450,000 home pays roughly $1,500 once for an owner's title policy. Years later a contractor's lien from the previous owner surfaces; the insurer defends the claim and pays it, and the homeowner's equity is untouched.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.