Breaking Down the Cost of Owner's Title Insurance

How Title Insurance Costs are Determined

Unlike many closing costs that vary or can be negotiated, title insurance rates in Kentucky follow a standardized structure that eliminates the need to shop around for better pricing. “Title insurance rates are set by the title underwriters and governed by the state board of insurance,” Alison Sheshull, Business Development Officer at Bluegrass Land Title, explains. “The rate you receive is an exact calculation that’s based on the purchase price of the property.” This means that you can’t negotiate or comparison shop for lower rates between companies.

Title insurance is a one-time premium paid at closing, not a recurring expense like homeowner’s insurance. Various discounts may apply depending on your specific transaction circumstances. If you receive different quotes from different title companies, it’s likely because they’re offering different policy types and not because their rates are different. Both standard owner’s title insurance policies and enhanced policies are available to homebuyers. 

Getting a Title Insurance Quote for Your Transaction

There are a few ways you can get an accurate title insurance quote. The simplest method is to use Bluegrass Land Title’s Quick Quote tool on our website, which provides instant estimates based on your property information. 

You can also call your local Bluegrass Land Title office directly. Our team can calculate your exact title insurance costs and answer any questions about coverage. If you prefer to work through your real estate agent, they can also request quotes on your behalf and help explain the details. 

To get the most accurate quote, you’ll need to provide the property’s purchase price, location, and transaction type (purchase, refinance, etc.) If you’re refinancing, having information about any existing title policies may help determine if you qualify for discounted rates. Your quote will typically include a breakdown of all title-related costs, including the lender’s policy, homeowner’s policy, and title policy sales taxes. 

You can request a title insurance quote at any stage of your home-buying process, but you may find it helpful to get this information early. Knowing your title insurance costs upfront gives you time to ask questions about coverage options and helps you better budget for your closing costs.

Understanding Cost Factors and Discounts

While the base cost of title insurance is regulated in Kentucky, several factors can affect the final price. 

Type of Coverage

Two types of title insurance are available to homebuyers: standard and enhanced owner’s title insurance policies. A Standard Owner's Policy provides basic coverage against title defects that existed before your closing date. An Enhanced Owner's Policy offers more comprehensive protection, including coverage for post-policy fraud, boundary disputes, building permit violations, and other extended benefits.

At Bluegrass Land Title, we default to the enhanced policy because it provides substantially more protection for only about 10% more than the standard policy cost. “We believe this additional coverage represents significant value for homebuyers for a nominal amount more money,” Sheshull explains. 

Simultaneous Issue Discount

If you’re purchasing a home with financing, you’ll receive a substantial discount on your owner’s title insurance policy. The simultaneous issue rate applies when both a lender’s policy and an owner’s policy are issued at closing. 

Different underwriters structure this discount differently. Some discount the owner’s policy, others discount the lender’s policy, and some use a flat fee for the combined policies. But regardless of how it’s calculated, the simultaneous issue rate typically results in significant savings compared to purchasing the policies separately.

Refinance Considerations

When refinancing your home, the new lender will require a new lender’s title policy. However, you’ll benefit from what’s called a “reissue rate”, which is approximately 30% off the standard lender’s policy premium. This discount applies because a previous title search and policy were already issued for the property.

Owner’s title insurance policies are effective for as long as you or your heirs own the home. So if you have an existing owner’s title insurance policy, you won’t need to purchase a new one. If you didn’t purchase an owner’s policy originally, your refinance is a great time to do that.

30 Days After Closing

If you decide not to purchase owner’s title insurance at closing for any reason but later reconsider, you have a limited opportunity to still get the discounted rate. “If buyers opt out of title insurance at closing, I always encourage them to go home, do some more research about title insurance, and call me if they have questions. If they decide they want to purchase a policy, it’s best to purchase it within 30 days,” Sheshull explains. 

After thirty days, the cost of your owner’s title insurance policy increases substantially for several reasons. First, the simultaneous issue discount expires. Additionally, the title company may need to conduct a new title search at your expense, further increasing the cost. 

The Value of Owner's Title Insurance

Owner's title insurance is an affordable one-time investment that provides exceptional value by protecting your entire ownership interest in your property against unforeseen title issues. 

Beyond the financial protection from potential claims, which the insurance company handles entirely on your behalf without you needing to write a check, title insurance offers the peace of mind that comes with knowing your home ownership rights are secure. 

Financial Protection from Title Claims

Owner’s title insurance protects the entire value of your property against title defects that could threaten your ownership rights. Without this protection, homeowners can face substantial financial losses and legal expenses when title issues arise. 

Consider a worst-case scenario: an undisclosed heir makes a legitimate claim to your property after you’ve purchased it. Without title insurance, you would be responsible for tens of thousands of dollars in legal fees, regardless of the outcome. If the claim is valid, you might lose a portion of your property or even your entire investment. 

Title insurance also provides coverage for smaller claims. If a contractor who provided work on your home before closing wasn’t paid by the seller for that work, they can file a mechanic’s lien against the property. Without owner’s title insurance, the new owner is either responsible for paying this debt or hiring an attorney to fight the claim. 

With owner’s title insurance, the homeowner’s responsibility in each of these situations is simply to file a claim with their title insurance provider.

Hands-Off Resolution

One of the most valuable aspects of title insurance is the hands-off claim resolution process. When an insured homeowner faces a title claim, they simply file a claim with their underwriter, who then handles the entire dispute.

The title insurance underwriter covers all legal fees, court costs, and related expenses to defend your title. If the claim is valid, the insurer either pays to resolve the claim or compensates you for your loss up to the full policy amount. Throughout this process, your financial and time investment is minimal. 

Full, Lifetime Protection

Many homebuyers mistakenly believe that because their lender requires title insurance, they're automatically protected. This is a dangerous misconception. A lender's policy only protects the lender's interest in your property, not yours.

For example, if a boundary dispute arises that reduces your property value by 15% but doesn't affect the lender's security interest, the lender's policy won't help you. Similarly, if an undisclosed heir claims partial ownership of your property, the lender's policy provides no protection for your equity or legal costs.

Furthermore, a lender's policy coverage decreases as you pay down your mortgage and expires completely once the loan is paid off. In contrast, an owner’s policy covers your full property value and remains in effect as long as you or your heirs own the property. 

Paying for Owner's Title Insurance

Adding owner’s title insurance to your real estate transaction is easy. If you elect to purchase an owner’s policy before closing day, we’ll simply include this premium as part of your standard closing costs. The amount will be clearly listed on your ALTA settlement statement that you'll receive before closing. There's nothing extra you need to do: the premium is paid along with your other closing costs, typically through your closing funds.

If you haven’t made up your mind about owner’s title insurance before closing, that’s okay. Your closing agent will still explain the benefits and coverage options during your closing appointment. This gives you another opportunity to consider this protection before you finalize your transaction. 

Should you decide at closing that you want to purchase an owner’s policy after all, payment is simple. Unlike other closing costs that require certified funds, we accept personal checks or credit cards for title insurance premiums added at closing. 

And if you leave closing without purchasing an owner’s policy but later reconsider, you still have options. You can still purchase owner’s title insurance at the same discounted rate within 30 days of your closing date. 

When evaluating the cost of owner's title insurance, remember that this one-time premium provides lifetime protection for what is likely your largest investment. While the upfront cost might seem significant alongside other closing expenses, the per-year protection is only pennies per day when spread across your years of homeownership.

Unlike most other insurance products that require ongoing payments for coverage that may never be used, title insurance provides permanent protection against issues that could otherwise cost tens of thousands of dollars to resolve. 

We understand that title insurance concepts can be complex. Our team is always available to answer your questions about coverage options, costs, and the specific protections that matter most for your property. Whether you're purchasing a new home or refinancing an existing property, we're here to help you make an informed decision about protecting your real estate investment.