Title insurance is a policy that protects a homeowner, and their lender, against losses caused by problems with the property's title, meaning the legal record of who owns it and what rights others have over it. In Ontario, where the Financial Services Regulatory Authority of Ontario (FSRA) regulates insurance, title insurance is optional, it is paid as a one-time premium at closing (usually a few hundred dollars on a typical home), and an owner's policy lasts as long as you own the property.
Title insurance covers things like title fraud, errors in the public records, and some problems a current survey would have found, such as a neighbour's fence on your land. It does not cover the physical condition of the house, and it does not cover problems you knew about before you bought. Your real estate lawyer arranges it as part of closing, alongside the other items in the closing costs guide.
What title insurance covers
Title insurance pays for covered losses tied to the ownership record, plus the legal costs of defending your title. Exactly what is covered depends on the policy, so read the one your lawyer recommends, but owner's policies in Ontario commonly include:
- Title fraud. Someone forges your signature or uses a stolen identity to sell or mortgage your home. The policy helps cover the legal work to restore your title and related losses.
- Errors and omissions in the records. A mistake in the land registry, or a document that should have been registered and wasn't.
- Liens you didn't know about. For example, an unpaid contractor or a previous owner's unpaid property taxes or utility charges that attach to the property.
- Survey problems. Encroachments (a building, fence or driveway that crosses a property line) and other issues an up-to-date survey would have shown.
- Existing work orders and zoning problems. A city order to fix something a past owner did, or a structure that doesn't comply with zoning, where it existed before you bought.
- Work done without permits by a past owner. Many policies cover the cost of bringing unpermitted work into compliance if the city orders it, within the policy's limits.
Some policies also offer extra coverage, such as identity theft protection, for an additional fee. Your lawyer can explain the differences between policies and endorsements.
Why fraud coverage gets the most attention
Title fraud is rare, but it's the risk most buyers ask about. The Financial Consumer Agency of Canada lists title insurance among the ways to protect yourself, along with checking documents carefully and dealing with licensed professionals. Ontario also has the Land Titles Assurance Fund, set up under the Land Titles Act to compensate people for certain losses caused by real estate fraud and errors in the land registration system. It is a fund of last resort with its own rules and deadlines; title insurance is private coverage you buy on top.
What title insurance doesn't cover
Title insurance is about ownership and the legal record, not about the building. It generally does not cover:
- The physical condition of the home: the roof, foundation, furnace, wiring or plumbing. That's what a home inspection is for. For specific old-home issues, see the guides on knob and tube wiring and Kitec plumbing.
- Problems you knew about before closing, or that were disclosed to you.
- Problems you create after you buy, such as an addition you build without a permit.
- Environmental issues, such as contaminated soil, in most standard policies.
- Registered easements and restrictions that show up on title. These are usually listed as exceptions in the policy. If a property has one, read the easements guide.
- Changes in the law or zoning after your policy starts.
- Market value. It doesn't protect you if prices fall.
The exclusions and exceptions section of the policy is the part to read most carefully. Ask your lawyer to walk you through it before closing.
How much title insurance costs
Title insurance is a one-time premium, not an annual bill. FSRA, which regulates insurance in the province, says the cost varies with the value of the property and the insurer you choose.
For a typical home purchase, the premium usually runs about $250 to $500, and your lawyer collects it with your other closing funds. Higher-priced homes, rural properties, and policies with extra endorsements can cost more. Ask your lawyer for an all-in quote that shows the premium separately from their fee.
| How you pay | Once, at closing, through your lawyer |
| Typical premium | About $250 to $500 on a typical home |
| What sets the price | Property value, insurer, extra coverage |
| How long it lasts | Owner's policy: as long as you own the home |
| Required by law? | No, it's optional in Ontario |
Title insurance is a small part of the cash you need on closing. Land transfer tax is much larger; work yours out with the land transfer tax calculator.
See what you can afford, with closing costs included →
Owner's policy vs lender's policy
There are two kinds of title insurance policy, and they protect different people. An owner's policy protects you; a lender's policy protects the bank or other mortgage lender.
According to FSRA:
- Owner's policy. Protects you from the title-related losses listed in the policy, up to a maximum amount of coverage, for as long as you own the property.
- Lender's policy. Protects the lender if the mortgage turns out to be invalid or can't be enforced. Its coverage usually matches the amount of the mortgage.
Title insurance isn't required by law, but many lenders require a lender's policy before they'll fund a mortgage, or require either a lender's policy or an up-to-date survey. A lender's policy does not protect you. If you want coverage for yourself, you need an owner's policy, and your lawyer will usually quote the two together.
What your lawyer has to tell you
Real estate lawyers in Ontario must explain the options for protecting your title and tell you that title insurance isn't mandatory. They also can't take payments or benefits from a title insurer for recommending its policy without telling you. If you're unsure whether you need it, ask your lawyer what they would rely on instead and what that would cost.
Do you need title insurance if you have a survey?
A survey is a drawing by an Ontario land surveyor that shows the lot's boundaries and where the house, garage, fences and other structures sit. A current survey and title insurance overlap, but they aren't the same thing.
| Up-to-date survey | Title insurance | |
|---|---|---|
| Shows where the boundaries and buildings are | Yes | No |
| Tells you about a problem before you buy | Yes | No, it pays for covered losses after |
| Covers title fraud | No | Yes |
| Covers registry errors and unknown liens | No | Yes, within policy terms |
| Covers survey defects found later | No | Yes, within policy terms |
Here's the practical picture:
- Many homes don't have a current survey. Sellers often have an old one, or none. Older homes in established neighbourhoods across Kitchener, Waterloo and Cambridge commonly have additions, decks, sheds and fences built since the last survey.
- Lenders usually accept title insurance instead of a new survey. That's one reason most buyers end up with it.
- A survey can still be worth getting if you plan to build near a lot line, add a fence or pool, or if the boundaries matter to your plans, such as adding a unit. Title insurance pays for some losses after the fact; a survey tells you up front.
If the seller has a recent survey and there's nothing unusual about the property, some buyers rely on that plus the lawyer's title search. That's a decision to make with your lawyer, since it depends on the property and on what your lender will accept.
When you buy it and how claims work
You buy title insurance once, at closing, and you don't renew it. Your lawyer orders it after reviewing the title, adds the premium to your statement of adjustments, and sends you the policy after closing. Keep it with your other closing documents.
If something comes up later, such as a city work order from a past owner's renovation or a claim against your title, contact the insurer named on your policy and your lawyer. The insurer decides whether the issue is covered under the policy's terms. If you're not satisfied with how an insurer handles a claim, start with the insurer's own complaints process; FSRA's website explains the next steps for insurance complaints in Ontario.
Refinancing usually means a new lender's policy for the new mortgage. Your owner's policy generally stays in place as long as you own the home.