How Is Title Insurance Calculated In Florida?
Although True Concept Title offers our services nationwide, this one goes out to our homeowners in our home state of Florida! One of the most common questions we get from buyers, sellers, and industry professionals alike is how title insurance cost is calculated in our sunny state.
While you may feel tempted to try and save costs by not purchasing title insurance, we heavily encourage you not to slip into this mindset. Plus, if you’re taking out a home loan, your lender will likely require you to purchase a lender’s insurance. Today’s article will explain title insurance, why you need it, and how much it costs in Florida.
What is Title Insurance?
Now before we explain how much it costs, you might be wondering – what even is title insurance? To put it simply, title insurance protects the legal ownership of a property. ‘Title’ refers to the legal deed authorizing you as the rightful owner. In some cases, clouds on the title may come up out of nowhere, potentially invalidating your rights as the owner. That’s where title insurance comes in.
Title insurance protects both you and the lender from any liabilities or issues that may arise in the future.
We’ll use the following example to explain.
Say you close on a house and later find out that the previous owner had a huge pile of property tax debt. Title insurance takes that tax burden off of your shoulders. Without title insurance, you would have to settle the tax liability on your own or risk being kicked to the curb.
What Does Title Insurance Cover?
When you purchase an owner’s title insurance policy, you are personally protected as the owner from the following:
Legal Claims
These might impact your right to the property. Title insurance guarantees the company will defend your ownership and pay any resulting legal fees.
Liens
There are many types of liens, but they all refer to a debt that has yet to be paid. A title insurance agency will complete a thorough investigation of possible liens during a title search, but you will remain protected after closing.
Title Defects
Your title policy will keep you and your property safe if defects in ownership documents or unpaid taxes arise. You also may be protected from title theft.
Forgery and Undisclosed Heirs
In some cases, certain issues remain undisclosed at the time of purchase. This may include undisclosed easements or heirs as well as forgery.
How is Title Insurance Cost Determined in Florida?
The cost of title insurance in Florida ranges from $500-$1500, but several factors come into play. These may include:
- The property’s location
- Whether the property has the former owner’s insurance
- Whether you are refinancing or purchasing a new property
- Whether you are purchasing owner’s and seller’s title insurance
How is Title Insurance Calculated?
The state of Florida has defined five premium categories for paying title insurance.
Policy Amount / Rate per $1000
$0.00 up to $100,000 / $5.75
$100,000 up to $1,000,000 / $5.00
$1,000,000 up to $5,000,000 / $2.50
$5,000,000 up to $10,000,000 / $2.25
Over $10,000,000 / $2.00
For example, assume you have an insurance liability worth $500,000, so we can calculate the title insurance cost. You can calculate the premium for the first $100,000 at $5.75 for every $1,000. This means you will multiply $5.75 by 100, so the first premium will cost $575.
Since the remaining liability is $400,000, you will multiply at a rate of $5.00 per every $100,000. Therefore, you will multiply $5.00 by 400 to calculate the second premium value of $2000.
Your total cost will be $575 + $2000, making your title insurance $2,575.
Additional Costs
On top of the owner’s coverage cost, you may have extra costs to acquire the property. This may include:
- Title Search Costs – you may have to pay an additional fee for this process
- Simultaneous Issue Costs – If you take a lender’s and owner’s policy out at the same time, you may have to pay extra fees
- Reissue Rate – If the previous owner had a title policy, you may have to pay a reissue rate
Learn More > What Kinds of Title Insurance Do You Need?
Title Insurance: Worth the Cost
While you might feel reluctant to pay the price of title insurance, you’re much better off without the risk of paying the price if you don’t have it. Fortunately, title insurance is a one-time premium charge that will remain in effect until you are ready to sell.
Since the payment is less than one percent of the appraised value, it is certainly worth the investment. If you’re purchasing a new home or refinancing, and you need title insurance, True Concept Title is ready to serve you.
Our quick, organized, and reliable team of agents will help make the home buying process as smooth as possible so that you can get settled into your new home in no time. Contact our team today!
