What is the difference between owner’s and lender’s title insurance?

Owner’s title insurance protects the homeowner from financial losses or legal costs related to title disputes or defects. This one-time purchase ensures that you, as the property owner, are covered. Lender’s title insurance, on the other hand, protects only the lender's interest in the property if a title issue arises. Note that while lender’s title insurance is commonly required, owner’s title insurance is optional but highly recommended.

Is owner’s title insurance a one-time fee?

Yes, owner’s title insurance is a one-time fee paid at the time of closing. Unlike other types of insurance that require monthly or annual payments, this policy remains in effect for as long as you or your heirs hold an interest in the property. Its long-term coverage for a single upfront cost makes it a cost-effective way to protect your investment.

Does Michigan’s Borrower‑Pays Rule for Lender’s Title Insurance Impact You?

Blue Pointe Title
Jul 23, 2025
3 min read

Updated: Oct 15, 2025

Title Insurance for Historic Adrian Michigan Real Estate

Buying a home in Michigan? You may see a fee for lender’s title insurance on your settlement sheet. But what exactly is that, and do you really have to pay it? Under Michigan law, the borrower absorbs this fee—whether through the seller or lender—but the choice of title company usually rests with the buyer. Understanding this rule can save you money and prevent last-minute surprises.

The Two Types of Title Insurance—And Why You May Need Both

Simply put, there are two title insurance policies:

Lender’s Title Insurance: Protects the lender’s investment in your loan, covering up to the loan amount.
Owner’s Title Insurance: Protects you from past defects in the title—including fraud, liens, or undiscovered heirs—for as long as you own the home.

In Michigan, it’s customary for the seller to cover the owner’s policy, while buyers pay for the lender’s policy. That means customarily, sellers foot the bill for your protection—making title insurance a shared yet balanced investment.

Why Skipping Owner’s Title Insurance Can Cost You Later

Let’s envision two homebuyers:

Buyer A skips owner’s title insurance—relying solely on the lender’s policy. A year later, they face a claim from a hidden heir. Without protection, they must pay legal fees out of pocket.
Buyer B opts for both policies. When a similar claim arises, their owner’s policy covers legal defense and clears their title.

How Much Does Title Insurance Cost in Michigan?

Which story do you want? For just 0.5–1% of the purchase price, owner’s title insurance offers lifelong protection. Meanwhile, lender’s insurance is non-negotiable if you’re financing.

Protect your investment now. Talk to Blue Pointe Title, your title insurance professionals in Michigan and Adrian, MI, about securing both lender and owner’s title insurance.

📞 Call today or request a quote. Let's make sure you're fully covered during your closing and beyond.

You Choose the Title Company—Here’s Why That Matters

Borrowers must pay lender’s title insurance once, either via seller or lender, per Michigan statute
Owner’s title insurance often paid by sellers—but beware: this is negotiable and depends on your purchase agreement
Coverage durations differ: lender’s policy ends when the loan is paid off; owner’s coverage lasts as long as you own the home michigan.gov.
Total cost: Expect 0.5–1% of the sale price (e.g., $2,000–$4,000 on a $400K home), with the owner’s and lender’s policies often bundled at a discount .
Buyer chooses the company, per federal RESPA, even if the seller is paying .

Title Insurance Coverage: How Long Does It Last?

Michigan’s borrower‑pays rule is straightforward: if you have a mortgage, you’ll pay for lender’s title insurance. Owner’s title insurance, typically paid by the seller, is optional—but missing it could leave you unprotected. Ensure your title is fully covered with help from a trusted Adrian, MI title insurance expert—Blue Pointe Title is here to guide you every step of the way.

Frequently Asked Questions

Q1: What is lender’s title insurance? Lender’s title insurance protects the mortgage lender—not the buyer—against title defects that could affect loan repayment.

Q2: Who pays for lender’s title insurance in Michigan? Typically, the buyer pays for the lender’s policy as part of their closing costs.

Q3: What does owner’s title insurance cover? Owner’s title insurance protects you—the homeowner—from legal and financial losses due to title issues like forgery, unpaid liens, or ownership disputes.

Q4: Do I have to buy owner’s title insurance? It’s optional, but highly recommended. It’s usually a one-time cost and lasts as long as you own the property.

Q5: Can I choose the title company? Yes! Under federal law (RESPA), the buyer has the right to choose the title insurance company, even if the seller is paying for it.