Although the seller was charged with fraud, that didn’t change the fact that the Morgans – as well as the numerous other buyers who had been deceived – didn’t legally own the property they had purchased. The couple then contacted the company from whom they purchased a title insurance policy. After review of the policy, the title insurance company promptly reimbursed the couple in full for the $22,000 property purchase price, which was for the lot only. The Morgan’s small investment in a title insurance policy protected the large property investment on which they were to build their dream home.

The importance of title insurance
Unlike car, homeowner or life insurance – which all protect against potential future mishaps – title insurance safeguards

against past events. The benefit of title insurance is to protect against the possibility of hidden title defects, which may not surface even in the course of a thorough title examination. These defects could include lost or forged deeds, claims of undisclosed or missing heirs, documents signed by minors or mentally incompetent persons, clerical errors made at the courthouse or confusion resulting from similar names.

Title insurance may seem to be a small factor in the home buying process, but it greatly impacts the state of the economy. Studies have shown that citizens’ welfare is positively impacted and the community’s prosperity and growth is stronger in economies where private property rights are present and protected.