Title insurance is an insurance policy that covers any loss of ownership due to any type of legal defects in your documents. It can protect you in situations when someone wants to contest your owneship of the property or when the land title itself is destroyed.
This is how it works: First, the representative of the insurance company will search for any clerical errors that may cause you to lose your home ownership. They will also look for anything that looks fake.
After this, the representative of the insurance company will create a binding contract saying that they will defend you when someone tries to unlegitimize your ownership. Title insurance ensures the protection of both the homeowner and future buyers of the property.
Disputes over property is common in the Philippines. This is why Senate Bill No. 116 – Land Title Insurance is created. Introduced by former senator Nene Pimentel, this senate bill stipulated the basic laws over title insurance. Below are some important things to remember:
Title policy
The law stipulates that title insurers, or companies that create title insurance, are not allowed to issue any form of title binder, preliminary report, insurance policy, and others until it is approved by the insurance commission. The law also prohibits title insurers from creating two or more policies on one property.
The risk premium
Risk premium refers to the minimum amount of money that can be returned just in case something risky happened in your title. The law asks the insurance commission to create guidelines for risk premiums. The insurance commission must review the risk premium and the services added, and revisit it every five years. The insurance commission must also hold consultations and public hearings to inform insurance companies and agents. It is also illegal for the commission and the land insurer to get a portion out of the risk premium.
Coverage
The law also wants land insurers to retain important files of the property for at least 10 years so that they can have a copy just in case of an emergency.
Now that you know the basics, how would you know that your chosen insurance company is legible. Ask these questions to find out:
- Are the prices good? – Of course you would want to get the best deal that fits your property. Compare prices first before choosing a company.
- Where should I look? – Have no idea where to start? Then ask your real estate agent to recommend a good land insurance company.
- What coverage do I need? – Standard insurance can protect you from fraud, forgery, and spousal claims. Asking for an additional coverage may boost the amount that you’re going to spend.
Consult your real estate agent on which insurance company to trust. When buying a property, do not forget to have a talk with the seller on the land title. It’s one of the ways that can assure you that everything will run as smoothly as possible.
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