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Title Insurance in Pennsylvania: What It Covers and What It Costs
By Lena Polnet, NMLS #17225 | Dynamic Funding Solutions, Inc.
At a Pennsylvania closing, two line items on the settlement sheet catch buyers off guard more than almost anything else: the owner’s title insurance premium and the lender’s title insurance premium. Together they can run $1,500 to $3,000 or more depending on the purchase price, and most buyers have never thought about them before the closing disclosure arrives. Unlike homeowner’s insurance, which you shop for and renew every year, title insurance is a one-time premium paid at closing that protects against problems you cannot see — defects in the chain of ownership going back decades. This guide explains what it covers, what the two policies are, what a title search actually finds, and what the premium looks like on a Pennsylvania transaction.
Owner’s Policy vs. Lender’s Policy — You Need Both
There are two title insurance policies involved in every financed home purchase, and they serve different purposes. The lender’s title insurance policy (also called a loan policy) protects the mortgage lender up to the amount of the loan. It is required by virtually every lender as a condition of financing — not optional. As the loan balance decreases, the protection decreases proportionally, and the policy terminates when the loan is paid off. This policy protects the bank, not you.
The owner’s title insurance policy protects the buyer. It covers the full purchase price and remains in force for as long as you or your heirs own the property — there are no renewals, no annual premiums, and no expiration. If a title defect surfaces five or fifteen years after closing, your owner’s policy is still active. The owner’s policy is technically optional from the lender’s perspective, but it is almost always recommended by real estate attorneys and settlement agents. In Pennsylvania, the standard practice is to purchase both policies simultaneously at closing.
What a Title Search Finds Before Closing
Before issuing title insurance, the title company conducts a title search — a review of the public record chain of ownership going back a defined number of years (typically 40-60 years in Pennsylvania). The title search looks for recorded mortgages, liens (tax liens, mechanic’s liens, judgment liens), easements, restrictions, encumbrances, and gaps in the chain of ownership where the title passed improperly.
Common title search findings in Pennsylvania include: prior mortgages that were paid off but never properly discharged from the public record; municipal water/sewer liens that were not disclosed by the seller; estate-related issues where a deceased prior owner’s estate was never fully administered; and easements or deed restrictions that limit how the property can be used. Many of these can be resolved before closing — a mortgage release can be obtained, a lien can be paid, an estate issue can be cleared. The title search is the mechanism for surfacing them early enough to address before you own the problem.
What Title Insurance Protects Against After Closing
Title insurance kicks in for defects that were not discoverable through the title search — problems hidden in the public record or outside of it entirely. Standard coverage includes:
Forgery and fraud: A prior deed was signed by someone who did not have legal authority, or a forged signature transferred ownership fraudulently. This happens more often than most buyers realize, particularly in properties with multiple prior owners or estates.
Unknown heirs: A prior owner died without a will, and an heir surfaces years later claiming an ownership interest in the property you purchased. Without title insurance, this can become a serious legal battle over ownership.
Undisclosed liens: A contractor placed a mechanic’s lien against the property that was never recorded properly and did not appear in the title search. Or a prior owner had a federal tax lien that attached to the property.
Survey and boundary issues: An encroachment discovered after closing that affects your title. Enhanced owner’s policies in Pennsylvania can also cover certain post-policy events like zoning law violations from before closing.
Pennsylvania Title Insurance Cost Structure
Pennsylvania title insurance premiums are regulated by the Pennsylvania Insurance Department and set on a schedule based on the purchase price (for owner’s policy) or loan amount (for lender’s policy). The premium is a one-time charge paid at closing — there are no annual renewals. Rates are set per thousand dollars of coverage with a decreasing schedule at higher price tiers.
As a general reference: on a $350,000 Pennsylvania purchase with a $280,000 loan, the owner’s policy premium typically runs approximately $1,500–$1,900, and the simultaneous lender’s policy (discounted when both are purchased at the same time) runs approximately $300–$500. These figures vary by title company and county — settlement agents in Philadelphia and the surrounding counties may charge differently, and the title company’s fees are separate from the premium itself. The settlement fee, title search fee, and title insurance premium are distinct line items on the CD.
In competitive PA markets, sellers sometimes offer to pay for the owner’s title policy as a concession — this is negotiable and worth discussing with your agent before making an offer. In Florida, by contrast, it is customary in most counties for the seller to pay for the owner’s title insurance, reversing the PA convention where the buyer typically pays.
Frequently Asked Questions
- Can I skip the owner’s title insurance policy on a Pennsylvania home purchase?
- You can decline it — unlike the lender’s policy, the owner’s title insurance is not required by your mortgage lender. However, virtually every real estate attorney in Pennsylvania recommends against skipping it. The premium is paid once and the protection lasts as long as you own the property. If a title defect surfaces in year 10 — a forged deed, an unknown heir, an undisclosed lien — you will bear the full legal cost of defending your ownership without insurance. For most buyers, the premium is a small fraction of the purchase price and a straightforward risk management decision.
- What is a simultaneous issue discount on title insurance?
- When the owner’s policy and lender’s policy are purchased from the same title company at the same closing, the lender’s policy is typically issued at a substantially discounted rate — sometimes as low as $50–$100 above the minimum. This simultaneous issue discount makes purchasing both policies at the same time the standard practice at Pennsylvania closings. The total cost of both policies simultaneously is generally less than buying the lender’s policy alone and adding the owner’s policy separately later.
- Does title insurance cover problems that happen after closing?
- Standard title insurance covers title defects that existed before or at the time of closing, not events that create new title problems after closing. If your neighbor builds a fence that encroaches on your property next year, title insurance does not cover that dispute. However, enhanced owner’s policies — available in Pennsylvania for an additional premium — can extend coverage to certain post-policy events, including some zoning violations that predate your purchase but were not disclosed. Ask your title agent whether an enhanced policy is appropriate for your specific property.
- How does the PA title insurance premium compare to Florida?
- Both states regulate title insurance premiums, but the rate schedules differ. Florida’s rates are set by the state’s Department of Financial Services and tend to be slightly lower per thousand at higher price points. A significant practical difference is the closing convention: in most Florida counties the seller pays for the owner’s title policy; in Pennsylvania the buyer typically pays. If you’re purchasing in Florida, confirm the local county convention with your agent early — it affects how you should structure your offer relative to expected closing costs.
Questions About Closing Costs and Title Insurance in Pennsylvania?
Lena Polnet walks every buyer through the full closing disclosure before the table — no surprises on settlement day.
Call Dynamic Funding Solutions: (215) 364-7171
Lena Polnet, NMLS #17225 | Licensed in Pennsylvania & Florida
Dynamic Funding Solutions, Inc. — NMLS #17144. Licensed mortgage broker in Pennsylvania and Florida. This article is for educational purposes only and does not constitute legal or insurance advice. Title insurance premiums, coverage terms, and closing conventions vary by transaction, county, and title company. Consult a licensed title agent and real estate attorney for guidance specific to your transaction.
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