Title insurance is an insurance product. It is often misunderstood and deemed of little value, but not for Carol Bee. She was able to qualify for a low–interest loan from the United States Department of Agriculture Rural Housing Community Development Service, which she used to purchase her own home. As contracted in the purchase and sale agreement, the seller paid for a standard owner's policy for Carol.

The loan program has very strict criteria for low–income individuals. These criteria include such items as the ratio of an individual's salary to their loan payments and the amount he or she can afford to pay for real property taxes.

Shortly after her purchase of the property, Carol received a new tax bill for real property taxes. The bill disclosed the taxes were more than $2,000 per year.

When Carol contacted the assessor's office, she was told the increased taxes included a $9,000 special assessment for a special street tax. This special tax had not been shown as an exception on her title insurance policy.

Both Carol and the lender contacted the title insurance company. Prompt arrangements were made to pay the special taxes. Carol benefited from her title insurance policy — a policy she did not even pay for. Clearly, title insurance is well worth the cost.

This article offers an example of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary (1) by state, company or locality, and/or (2) the coverages in your policy. For exact terms, conditions, exclusions, and limitations, please review your own title insurance policy or contact a title insurance company authorized to do business in your location.