Enhanced Owner's Policy: Understanding Title Insurance
When purchasing a home, you may come across two primary types of title insurance for homeowners: the Standard Owner’s Policy and the Enhanced Owner’s Policy. While a Standard Owner’s Policy offers essential protection, an Enhanced Owner’s Policy provides expanded coverage that can safeguard you against a broader range of potential issues. Below, we’ll explore what sets the Enhanced Owner’s Policy apart and why it might be worth considering.
What Is an Enhanced Owner’s Policy?
An Enhanced Owner’s Policy builds upon the coverage provided by a Standard Owner’s Policy, offering additional layers of protection that often account for risks arising after you’ve taken ownership. These policies typically include coverage for problems that may surface post-closing, rather than merely focusing on title defects known at the time of purchase.
Key Features of an Enhanced Owner’s Policy
Post-Closing RisksStandard policies generally address issues existing prior to or at the time of closing. An Enhanced Owner’s Policy may also cover certain problems that materialize after you’ve purchased the property—such as post-policy forgery, encroachments, or liens that appear down the road.
Expanded Coverage for Permits and ZoningEnhanced policies can protect against unpermitted structures on your property or unforeseen zoning violations. These issues can be costly to rectify and may threaten your ability to use the property as intended.
Protection Against Forced Removal of StructuresIf a part of your home—or an improvement, such as a fence—encroaches onto a neighbor’s property or violates an easement, an Enhanced Policy can help cover the costs of relocating, modifying, or even removing that structure.
Inflation CoverageMany Enhanced Owner’s Policies include provisions for inflation, allowing your coverage to adjust as the market value of your home increases. This helps ensure your investment remains protected, even if your property’s value rises significantly over time.
Boundary and Survey DiscrepanciesWhile a Standard Owner’s Policy may offer some boundary-related coverage, an Enhanced Policy typically provides broader protection against survey errors, unrecorded easements, or other boundary disputes discovered in the future.
Cost vs. Benefit
Enhanced Owner’s Policies usually cost more than Standard Policies, reflecting their additional scope of protection. For many homebuyers, however, the extra peace of mind is well worth the higher premium. If you’re planning on remodeling, building new structures, or you’re concerned about boundary lines, the Enhanced Policy can be especially beneficial.
Who Should Consider an Enhanced Policy?
Buyers of Older Properties: Properties with a lengthy history of renovations or changes may have hidden permit issues or boundary encroachments.
Renovation-Minded Buyers: If you plan on making significant alterations to the property, expanded coverage can protect against newly discovered zoning or permit violations.
High-Growth or High-Value Areas: In markets where home values rise quickly, inflation protection helps your policy keep pace with increasing property values.
An Enhanced Owner’s Policy offers a comprehensive safety net beyond the basic title protections. By extending coverage to potential post-closing issues, it provides added security for homeowners looking to protect their investment and enjoy true peace of mind. Before deciding on a policy, consult with your title company or a real estate attorney to weigh the costs, benefits, and specifics of your situation. In many cases, the extra coverage is a smart choice that can save you time, stress, and money down the road.