Title insurance is an essential requirement for property acquisition, as it protects you against liabilities that may accompany property ownership. In Florida, title insurance costs an average of $1,000 for property owners.
Here is an overview of what title insurance is, what it covers, and how much it costs in Florida. Plus, you’ll learn how to calculate title insurance costs.
What Is Title Insurance?
Title insurance determines the legal ownership, rights, and interests of a property. It shields you from previous claims and encumbrances placed on the house or real estate.
As a result, as the homeowner, you are protected from any liabilities or claims arising from title issues such as hidden risks that may occur in the future.
For example, if you close a home buying deal and find that the previous owner owed property taxes, the title policy will protect you from the tax burden. Without insurance, you will settle the tax liabilities or risk foreclosure on the property.
What Is Included In Title Insurance?
When you buy an owner’s title insurance, it protects your right of ownership, provided you or your dependents own the property.
Thus, the title insurance covers the following:
Legal Claims - Legal claims may affect the right to own your newly acquired property. Having a title policy means the insuring company will defend the claim on your behalf or pay legal fees arising from the suit.
Liens - Contractors may sometimes put liens on the property during remodeling to help claim unpaid dues afterward. Title insurance enables you to uncover undisclosed liens during the title search. Thus, you will be safe from financial Liability.
Title or Ownership Defect - Title policies protect you against defects in ownership documents and unpaid taxes. Additionally, your insurer may cushion against scammers who may try to replace your name in the title.
- Forgery and Undisclosed Heirs - If your property has undisclosed issues at the time of buying, the title premium comes in handy. Such matters include undisclosed easements, undisclosed heirs, erroneous legal descriptions, and forgery.
How Much Does Title Insurance Cost In Florida?
In Florida, the State Department of Financial Services sets the cost of title insurance in collaboration with financial institutions. 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 will be $575.
Here are more factors that affect title insurance costs:
- The location of the property.
- Whether the property has the former owner’s insurance.
- Whether you are refinancing or buying a new property.
- Whether you are purchasing both owner’s and seller’s title insurance.
How Can You Calculate Title Insurance Cost?
The Florida State Department uses a set of five outlined premium categories of paying title insurance.
You can calculate your title costs based on property value and using promulgated rates set by the state government.
Below are 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.
Here is an example:
Assume you have an insurance liability worth 450,000 to calculate insurance title cost.
You can calculate the premium for the first $100,000 at $5.75 for every $1,000. Dividing $100,000 by $1,000 means you’ll multiply $5.75 by 100 to get premium value. Therefore, the first premium will be $575.
The remaining Liability is worth $350,000, which exceeds the minimum threshold for the first premium. Therefore, at a rate of $5.00 for every $1,000, you multiply $5 by 350 to get the second premium value of $1,750.
Adding both values, your total title insurance cost will be $575+$1,750 = $2,325.
In addition, you can use a title insurance calculator provided by an accredited insurance provider. A title calculator gives you real-time estimates of what you will likely pay to your insurance provider.
Besides the owner’s coverage, title insurance may have extra costs that cover the closing processes of property acquisition.
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.
Title Insurance Cost: Is It Worth?
The Florida Finance Code has five well-defined guidelines for title premium. It is a one-off premium charge that will remain available for the duration of your property ownership. The payment is less than one percent of the appraised value, making it a sound investment to safeguard your home.
Consider acquiring a title policy from your nearest accredited insurer if you own a property.