Why Title Insurance Costs What It Does — And Why Other Insurance Is Different
Why Title Insurance Costs What It Does
Title insurance often feels like the oddball in the insurance world. Instead of annual premiums, buyers pay a one-time charge at closing that can protect an owner or lender for decades. That structure is fundamentally different from auto, homeowners, or health insurance—and misunderstanding that difference has fueled public criticism, including from Senator Elizabeth Warren.
WHAT TITLE INSURANCE ACTUALLY PAYS FOR
Title insurance protects against defects in ownership history that existed before the buyer acquired the property, such as undisclosed liens, missing heirs, forged deeds, boundary disputes, or unpaid taxes. Before a policy is issued, title professionals examine decades of public records, identify defects, and cure them where possible. As First American explains, “most of the cost of title insurance is for the title search and examination process that happens before you close.”¹
That work is labor-intensive and highly localized, relying on county records, legal expertise, and corrective action. The premium reflects this front-loaded work, not an expectation of frequent future claims.
WHY OTHER INSURANCE WORKS DIFFERENTLY
Auto, homeowners, health, and liability insurance are forward-looking risk-pooling products. Consumers pay recurring premiums so insurers can cover future events—accidents, fires, illness, or lawsuits—that may or may not occur. Pricing is driven by actuarial models and expected loss ratios, and insurers expect to pay claims regularly. Because the risk never disappears, premiums never stop.
Title insurance does not work that way. Once the title is examined and the deed is recorded, no new risks are being introduced. The risk profile is fixed at closing, which is why the premium is paid once.²
ELIZABETH WARREN’S CRITICISM — AND WHERE IT MISSES THE MARK
Senator Elizabeth Warren has repeatedly criticized title insurance, characterizing it as unnecessary and overpriced. In April 2024, she wrote that being “forced to pay for title insurance when you buy or refinance your home is a scam.”³ Her criticism assumes title insurance should operate like other consumer insurance products—ongoing protection against future risks.
But that framing misunderstands the product. Title insurance is not priced to insure against random future events. It is priced to pay for the work required to verify ownership, resolve known risks, and deliver marketable title before money changes hands. The premium reflects completed legal and investigative work, not anticipated claims.
ONE-TIME WORK VS. ONGOING UNCERTAINTY
Title insurance pays once to resolve past risks tied to a specific parcel of real estate. Other insurance products charge continuously to manage unknown future losses across large populations.
THE BOTTOM LINE
Title insurance looks different because it is different. It is preventive rather than predictive, front-loaded rather than actuarial, and focused on curing problems before they cause harm. Criticisms that treat it as interchangeable with auto or health insurance miss the core economics of the product and the value it provides at the moment ownership transfers.
SOURCES
¹ First American Title, “What Is Title Insurance and Why Do I Need It?” (explaining that most costs are tied to the pre-closing title search and examination).
https://www.firstam.com/home-buying-guide/what-is-title-insurance-and-why-do-i-need-it/
² First American Title, “How Much Does Title Insurance Cost?” (describing one-time premiums and long-term protection).
https://www.firstam.com/home-buying-guide/how-much-does-title-insurance-cost/
³ Senator Elizabeth Warren, X (formerly Twitter), April 2024 (criticizing mandatory title insurance in home purchases).
https://x.com/SenWarren