Title insurance: what it covers, and what it doesn't.

Title insurance protects against financial loss arising from problems with a property's title — the legal record of ownership — that existed before the policy was issued but weren't discovered at the time. It's a one-time premium paid at closing, with no renewal, and coverage generally continues for as long as the insured retains an ownership interest in the property.

It exists alongside, not instead of, a lawyer's own title search and legal opinion — the policy is what pays out if something the search missed, or couldn't have caught, surfaces later.

Coverage generally falls into three buckets. Title issues: someone else having a competing claim to the property, or an undisclosed lien securing a debt against it. Off-title issues that a title search wouldn't necessarily reveal: encroachments, unregistered easements, work done by a previous owner without the required permits, and — on some policies — unpaid property tax arrears left by the seller. Fraud and transactional issues: forged documents, identity fraud used to register a mortgage against the property, and errors in the public land registry itself.

Most policies also include a “duty to defend” provision — if someone challenges the insured's title, the insurer covers the legal costs of defending it, not just any eventual payout.

• →A defect the buyer already knew about before closing. Title insurance protects against unknown risk — if a problem was identified and disclosed before the deal closed, it's generally excluded, not insured.
• →Environmental issues such as soil contamination or other environmental hazards on or affecting the property.
• →Zoning or land-use violations the current owner created — an addition or renovation done without the right permits, for instance, that puts the property offside its own zoning bylaw.
• →The physical condition of the property. Title insurance is not a substitute for a home inspection; structural issues, moisture problems, or ordinary wear and tear fall entirely outside it.
• →Future events. A lien registered, or a zoning bylaw changed, after the policy's effective date isn't something the policy was ever meant to catch.

That list isn't exhaustive — individual policies carry their own specific exceptions and endorsement options — but it captures the categories that most often surprise a buyer who assumed the policy was broader than it is.

A lender's title insurance policy protects the lender's interest in the mortgage — up to the outstanding loan balance — and is a near-universal condition of closing on most Canadian mortgages today. It does not protect the borrower's own equity in the property.

An owner's policy is a separate product, purchased separately, that protects the buyer's own ownership interest. A file where only a lender's policy was purchased leaves the owner personally exposed to exactly the same categories of title risk the lender is protected against — a distinction worth making explicit to a client at closing, rather than assuming one policy covers both interests.

Some title insurers offer optional endorsements layered on top of the base policy. Stewart Title's StewartPROTECT endorsement, for example, extends coverage to certain lawyer or notary errors on a specific transaction — incorrect advice on the terms of the purchase agreement, mistakes on the statement of adjustments, or bad advice on how to take title — letting the insured claim directly under the policy rather than pursuing the lawyer separately.

Availability and exact terms vary by insurer, province, and transaction type — this kind of endorsement is generally sold alongside a new owner's policy, not added onto an existing one, and isn't offered on every transaction type. It's worth asking the closing lawyer what's available on a given file rather than assuming the base policy already includes it.

Because clients routinely assume title insurance is broader than it is, and a broker fielding that misunderstanding after something goes wrong is a worse conversation than having it upfront. Knowing specifically what's excluded — disclosed defects, environmental issues, property condition, future changes — lets a broker set accurate expectations at the point of closing, rather than after a claim gets denied.

It also matters on the file itself: a title insurance policy doesn't replace the underwriting checks a lender or fulfillment team runs before closing — things like confirming there's no undisclosed tax arrears or existing lien on the property are still worth verifying directly, not left entirely to the policy to catch after the fact.