What an owner's title policy actually covers when the lender already has one
A common point of confusion on a settlement statement is seeing a loan policy premium and an owner's policy premium as two separate charges from the same underwriter, on the same property, based on the same title search, with the owner's policy usually the larger of the two. The reason both exist is that they insure different parties against different losses. The lender's policy protects the lender's security interest up to the loan amount, and its coverage ends when the loan is paid off. It does nothing for the buyer's equity above the loan balance, and nothing for the buyer once the mortgage is retired. The owner's policy protects the buyer's ownership interest for as long as they or their heirs hold title, covering the full purchase price rather than a declining loan balance. Same search, two different risks being insured. On who the escrow officer works for: a title company can be selected by the seller's agent and still be required to act as a neutral escrow holder under the purchase contract and applicable law, holding the buyer's deposit and running the title search without representing either side. That said, it is common and reasonable for a buyer to have the option to choose their own title company, and understanding the escrow instructions before signing is worth doing before closing rather than after.
