What is Title Insurance? Your lender will require that you obtain title insurance. Simple put, title insurance guarantees you complete ownership of the home, free of past liens. The title company does a search at the court house on the property, the sellers, and the purchasers to determine what liens and outstanding judgments exist. The title company will then say that it guarantees that the new owners have clear title to the home, and if any issues arise later on from a problem that occurred before you owned the home, they will insure the loss. They also insure that the person selling you the home (and the people who sold them the home…and so on) had the legal right to sell the house.  Let’s say a husband and wife own a home and the husband takes off. The wife doesn’t know where he and gets a friend to pretend he is the husband when she sells the home. The home was not legally sold. Now let’s say that you purchased the home, and two years later the husband comes back and knocks on your door. Technically he still owns the home… not you. The title company will handle this claim and either pay him off, or compensate you for your losses.