Title Policy vs. Title Insurance: What Colorado Homebuyers Should Know
It’s easy to overlook title coverage when buying a home. But ignoring it can cost you more than you think. That’s why it’s important to understand the difference between title policy and title insurance, and what each one actually protects.
As a Realtor working with buyers and sellers across Arvada, Denver, and the greater Colorado market, I’ve seen how title issues can derail a deal—or worse, show up after closing.
Let me walk you through what you need to know, without all the jargon.
What Is Title Insurance?
When you buy a house, you're not just buying the building—you’re buying the legal rights to the property. Title insurance protects you if those rights are challenged.
This includes claims like:
- Unpaid taxes or contractor liens
- Ownership disputes or fraud
- Clerical errors in old documents
- Undisclosed heirs or prior mortgages
Title insurance covers legal fees or financial loss if any of these issues come up after closing.
There are two types of title insurance policies:
- Owner’s Policy – protects the buyer
- Lender’s Policy – protects the mortgage company
Most lenders require a policy to protect their interest. As a buyer, it’s common for the seller to pay for a buyer’s title insurance.
What Is a Title Policy?
The title policy is the actual contract between you and the title company. It outlines what is—and isn’t—covered. It’s issued after the title search is completed, which produces the preliminary title commitment, and the deal closes.
Here’s how it works:
- Before closing, the title company runs a title search
- If the title is clear, the policy is issued after closing
- The title insurance becomes active and stays in place for as long as you own the property
So, in simple terms:
- Title insurance is the protection.
- The title policy is the document that explains the terms of that protection.
Both are part of the same process, but they play different roles.
Why Title Review Matters in Every Colorado Home Sale
Every home has a story—and not all of it is visible.
In Colorado, many homes have been sold, refinanced, or inherited multiple times. That means paperwork errors or financial claims can easily slip through the cracks.
Here are a few common title issues:
- Unpaid subcontractors filing liens
- Mistakes in the legal property description
- Old claims that were never properly removed
These issues don’t always show up on a surface-level review—but they can cost you time and money if you’re not protected.
That’s why I review the title commitment before you close and notify you of any concerns. No assumptions. No skipped steps.
Why You Still Need Title Insurance
Title insurance steps in when something in the past threatens your future ownership.
It typically covers:
- Legal costs if your ownership is challenged
- Loss due to claims that weren’t disclosed
- Fraudulent activity in previous sales
- Mistakes made when public records were filed
These problems are rare—but when they happen, they can be devastating.
Let’s say you buy a home in Arvada, and years later someone shows up claiming they inherited part of it. With title insurance, you're protected. Without it? You could lose more than just sleep.
Is Title Insurance Required in Colorado?
Lender’s title insurance is required if you’re financing the home.
Owner’s title insurance is optional—but highly recommended.
As your Realtor, I always walk through these details with my clients. In most deals, the cost is a one-time fee paid at closing. It’s based on the home’s purchase price and typically ranges from $1,500–$3,500 in Colorado.
Most sellers may agree to cover the buyer’s title insurance as part of the deal. This can be negotiated.
Let’s Talk About Title Commitments—And Why They Matter
Think of the title commitment as a home’s history report.
Before the official title policy is issued, this document shows you what you're really buying.
It covers:
- The legal description of the property
- Any existing liens, easements, or restrictions
- Exceptions the title insurance won’t protect against
At Dempsey Group, we walk our buyers through every section—because what you don’t catch now could cost you later.
Buying New Construction? Don’t Skip This Step.
Even brand-new homes in places like Denver or Arvada can come with issues.
Contractor liens, unresolved land disputes, or recording errors happen more often than you'd think.
Title insurance still matters—and reviewing the commitment is just as important.
So, Title Policy vs. Title Insurance—What’s the Difference?
To give you more information about Title Policy vs. Title Insurance, here’s the simplest breakdown. Let's start with title insurance which is the coverage you buy to protect against past problems with property ownership. While title policy is the official document that outlines what the title insurance covers.
You don’t really have one without the other—they go hand in hand in every real estate transaction.
Buying or selling a home in Colorado means dealing with paperwork, deadlines, and legal details. Title coverage isn’t the most exciting part—but it might be one of the most important.
If you’re buying a house in Arvada, Denver, or nearby areas, don’t overlook the value of title insurance. Whether you’re a first-time buyer, Veteran, or experienced investor, Lauryn Dempsey will walk you through it—start to finish.