What is title insurance, and should I get title insurance for my home?
Here is a pretty exhaustive article on that question. Long story short, it is an insurance policy against the possibility that the person selling the property to you doesn't legally own it. If there was some mistake or fraud along the way the proper owner could theoretically repossess the property without you getting your money back. If you are financing the property, it is almost a certainty that the lender will require you to buy it whether you want it or not. When we got our mortgage in the state of Washington, in the United States, we had to get title insurance before our lender would loan the money. This ensures that the person selling us the house actually owns the title, clean and clear. If there are any surprises, the insurance covers us (or the lender, really). "Title insurance protects you from losing rights to your property in case of a court decision. Let's look at an example I recently found in local newspapers. One old woman sold her apartment to person A. The deed was attested by a notary public who verified that indeed in was that old woman putting her signature on the deed. Then person A sold the apartment to person B, etc, then after several deals some unfortunate Buyer bought that apartment. The deal looked allright, so he's got a mortgage to pay for the apartment. Later it turned out that the old lady died three months before she ""sold"" the apartment and the notary public was corrupt. Old lady's heirs filed a lawsuit and the deal was void. So the ultimate Buyer lost all rights to the apartment although he purchased it legally. This is the case when title insurance kicks in. You need one if there's a chance for a deal to be deemed void." "If or when you ""own"" your land outright you need to try and get the land patent on it. That is the supreme form of title to it. It goes back to when the land was acquired by the U.S. (from Britian, France, etc.) by treaty. Treaties trump even our Constitution. When you have a land patent.........IT'S YOURS! That link is to my site but this was so relevant that I had to include it. Hope y'all don't mind."
Never take the first quote. Consider what it would really cost to replace the house -- to rebuild and pay for living while you do so (including demolition, etc.) and/or pay off the mortgage and return your equity if it is a financed property.  Most insurances will have a limit on how much coverage you can get based on the property value and your goods value estimates.  Shop around for a company that will give you a good price but also good customer service and a smooth claims process.  They should be solvent (able to pay your claim if, say, a tornado hit the whole neighborhood).  And they should cover your reasonable replacement costs. And remember, insurance is about the big losses like fires. Know what you are comfortable self insuring (higher or lower deductibles, optional coverages, etc.) and you will have an easier time getting the coverage you need for the price you want to pay. "All of the insurance policies I'm familiar with have different costs for liability vs replacement coverage of the specific item. Typically liability insurance is very cheap by comparison, and is therefore a ""must-strongly-consider"". Insuring your specific item is up to you, and depends on how badly you'll feel if you lose it to theft or destruction. Even if you choose not to insure your boat for replacement value, don't forgo liability though, for if you hit something expensive, or if someone is severely injured or killed as a result of an action related to your boat, your outlay could be extremely high." A lien is a mechanism to impede legal title transfer of a vehicle, real property, or sometimes, expensive business equipment.  That's why title companies exist - to make sure there are no liens against something before a buyer hands money to a seller. The lien can be attached to a loan, unpaid labor related to the item (a mechanic's lien) or unpaid taxes, and there are other scenarios where this could occur. The gist of all this is that the seller of the vehicle mentioned does not have clear title if there is a lien.  This introduces a risk for the buyer.  The buyer can pay the seller the money to cover the lien (in the case of a bank loan) but that doesn't mean the seller will actually pay off the loan (so the title is never clear!).  This article recommends visiting the bank with the seller, and getting title on-the-spot.  However, this isn't always an option, as a local bank branch isn't probably going to have the title document available, though the seller might be able to make some arrangement for a local branch to have the title available before a visit to pay off the loan. The low-risk approach is for the seller to have clear title before any money changes hands. "The long and short of it is, the mortgage company has a significant interest in the resale value of the home in the event of a default.  Imagine a scenario where you say to yourselves that you're not going to repair the deck just yet (""meh, we'll do that next summer"") and something happens that causes a default on the mortgage. The resale value of the home may be harmed by the deck, even though you're willing to live with it.  That being the case, the mortgage company has every right to insist that you carry out the repairs in order to maintain the property in salable condition, so the essence of it is, you don't have much choice but to do the repairs. Keep in mind too that the insurance company paid for the roof and the deck to be repaired.  If they were to learn that you now have no intention of using the money to repair the property, you could end up in legal hot water with them.  After all, you did accept the check for repairs that you're now not carrying out." You could slip and fall in the shower tonight.  Or you might never need it. Insurance is a hedge against risk.  If the event has already occurred, you're uninsurable. If you and others would suffer if you have a bad accident and can't work, get it now. "What you need will depend on a number of factors that aren't clear from the question. This coverage is simply called ""Vacant home insurance"", but not all companies are willing to offer this coverage. Unfortunately, in New York, insurers can also legally drop your standard homeowners' coverage if they become aware that your property has become vacant for 30 days or more. The Insurer's Concerns Typically, a ""standard"" homeowners policy will have an exclusion clause for vacant homes. The insurance company's concern is that without someone in the home, they will be at risk for break-ins, squatters and vandalism. If you've ever seen ""Flip Men"" on Spike, you'll know this is a serious concern (great show, by the way). They will use a risk model to calculate an estimated risk for the property (this is why a seasonal vacation home in a sparsely-populated area is often less of a concern than a family home in an urban area). If they estimate the risk to be low, some insurance companies will allow to you buy back that exclusion so that vacant properties are covered. In your case, they have probably decided that either: Your Options First, you need to find a company that is comfortable with taking on the extra risk of a vacant home. This will vary quite a bit by location, but the main ones are Farmer's (they use the Foremost brand name in New York) and Castle Rock. There are lots of insurance agencies that also advertise these products, but most of them are middlemen and use one of these two companies to actually write the coverage. Additionally, since this is a specialty policy, make sure you understand all of the details of the policy, and how they vary from a regular policy including: How to Reduce your Premium costs These are general tips from the Murray Group's website (an independent broker in NY) on how to lower the additional cost of vacant coverage: This may sound expensive, but these steps will all reduce the risk of something really bad happening when you're not there. Additionally, do you know anyone you completely trust (relative, unemployed friend) that might want to live in your old house rent-free for a while? This could work out for you if they are willing to keep the place 100% clean around the clock so that you can show the house at any time. If you have additional/specific questions, you should be able to find an independent insurance broker in your area that would be willing to advise you on your specific situation for a flat fee. Best of luck with getting the home covered and sold quickly!" For each liability, you should insure to the risk. A $150k home should be insured for that amount plus contents. Same for your car, if you want to insure for damages, fine, but liability is mandatory. It's not about what you want to spend but how to not take on more risk than nescesary and not over insure which is just wasteful. Renters' Insurance should also have some level of liability coverage. I.e.: if you caused a flooding because you went on and broke the pipe, or a fire because you smoked in the bed - there should be some level of coverage for that. However, most of the damage the tenant can do is probably not accidental. If you broke the pipe - you probably did something wrong. If you caused fire by smoking in bed - you obviously did something wrong. While seemingly accidental, you're deeply at fault. Insurance companies are not in business for rewarding risky behavior. Accidents where the tenant has nothing to do with what happened (earthquakes, fires because of, say, wiring, flooding because it rained too much, or bird flying into a window and shattering it) - are covered by the homeowner's insurance. In any case, talk to your insurance agent about your specific policy and concerns. "According to US News, renter's insurance does cover liability as well as your own belongings.  They list this as one of four ""myths"" often promulgated about renter's insurance.  This is backed up by esurance.com, which explicitly mentions ""Property damage to others"" as covered.  Nationwide Insurance says that renter's insurance covers ""Personal liability insurance for renters"" and ""Personal umbrella liability insurance"".  Those were the first three working links for ""what does renters insurance cover"" on Google.   In short, while it is possible that you currently have a different kind of coverage, this is not a limitation of renter's insurance per se.  It could be a limitation in your current coverage.  You may be able to simply change your coverage with your current provider.  Or switch providers.  Or you may already be covered.   Note that renter's insurance does not cover the building against general damage, e.g. tornado or a fire spreading from an adjacent building.  It is specific to covering things that you caused.  This may be the cause of the confusion, as some sources say that it doesn't cover anything in the building.  That's generally not true.  It usually covers all your liability except for specific exceptions (e.g. waterbed insurance is often extra)." "Basically what @littleadv said, but let me amplify what I think is the most important point. As he/she says, one thing you're paying them for is their expertise. If the title on record at the county office had a legal flaw in it, would you recognize it? In a way your question is like asking, Why should I go to a doctor when I could just make my own medicine out of herbs I grow in my garden and treat myself? Maybe you could. But the doctor and the pharmacist have years of training on how to do this right. You probably don't. Is it possible for you to learn everything you need to do it right? Sure. But do you want to spend the time to study all that for something that you will do -- buy a house -- maybe once every ten years? Will you remember it all next time or have to learn it all over? But really most important is, title companies offer insurance in case the title turns out to be flawed. That, to me, is the big reason why I would use a title company even if I was paying cash and there was no bank involved to insist on it. If there's some legal flaw in the title and it turns out that someone else has a claim to my house, and I lose in court, I would be out about $100,000. Your house might be costing you much more. That's a huge risk to take. Paying the couple of hundred dollars for insurance against that risk seems well worth it to me. And by the way, I don't think the ""due diligence"" is easy. It's NOT just a matter of making sure a title is really on file at the court house and has the proper stamp on it. It's all about, Does someone else have a legal claim to this property? Like, maybe three owners ago someone forged a signature on a deed, so the sale is fraudulent, and now the person who was defrauded or his heirs discover the issue and claim the property. Or maybe the previous owner failed to pay a contractor who did repairs on the house, and now he goes to court and gets a lien on the property. It's unlikely that you have the expertise to recognize a forged document. You almost surely have no way to recognize a forged signature of someone you never met on an otherwise valid-looking document. And you'd have to do a lot of research to find every contractor who ever worked on the house and insure none of them have a claim. Etc." Title agencies perform several things: Research the title for defects. You may not know what you're looking at, unless you're a real-estate professional, but some titles have strings attached to them (like, conditions for resale, usage, changes, etc). Research title issues (like misrepresentation of ownership, misrepresentation of the actual property titled, misrepresentation of conditions). Again, not being a professional in the domain, you might not understand the text you're looking at. Research liens. Those are usually have to be recorded (i.e.: the title company won't necessarily find a lien if it wasn't recorded with the county). Cover your a$$. And the bank's. They provide title insurance that guarantees your money back if they missed something they were supposed to find. The title insurance is usually required for a mortgaged transaction. While I understand why you would think you can do it, most people cannot. Even if they think they can - they cannot. In many areas this research cannot be done online, for example in California - you have to go to the county recorder office to look things up (for legal reasons, in CA counties are not allowed to provide access to certain information without verification of who's accessing). It may be worth your while  to pay someone to do it, even if you can do it yourself, because your time is more valuable. Also, keep in mind that while you may trust your abilities - your bank won't. So you may be able to do your own due diligence - but the bank needs to do its own. Specifically to Detroit - the city is bankrupt. Every $100K counts for them. I'm surprised they only charge $6 per search, but that is probably limited by the State law. Fire insurance, as you have discovered, is a complete ripoff. Most people pay fire insurance all their lives with no benefit whatsoever, and those such as yourself who are lucky enough to get a payout find that it is completely insufficient to replace their loss. I once computed the actual beneficial net present financial value of my fire insurance policy and it came out to $40 per month. The cost was $800 per month. That is typical. Homeowners pay $500 to $800 per year for something that is worth $30 to $50 per year. Ironically banks would actually make more money from mortgages if they did not require mortgagees to buy insurance, but nevertheless they insist on it. It is not about logic, but about fear and irrationality. When I paid off my mortgage and gained ownership of my home the first thing I did was cancel my fire insurance. I now invest the money I would have wasted on insurance, making money instead of losing it. Being compelled to throw money down the toilet on fire insurance is one of the hidden costs of a homeowners mortgage in the United States. In your situation, the main option is to borrow the money to rebuild the house using the land as collateral, if the land is valuable enough. Of course, you still owe the money for your original mortgage on your now (non-existent) home. So, to get a home, you will have to have the income to service two mortgages. A loan officer at a reputable bank can tell you whether you have the income necessary to support two mortgages. If you were maxed out on your original mortgage, then you may not have enough income and you are screwed. In that case you will have to go back to renting and gradually paying off your old mortgage. (If it were me, I would sue the insurance company pro se as a way to get the necessary money to rebuild the home, because insurance companies roll over like a $20 hooker when they get sued. Juries hate insurance companies. But I am unusual in that I love courtrooms and suing people. Most people are terrified of courtrooms though, so it may not be an option for you.) There are two scenarios that I see. You have a mortgage on the property. Generally the insurance company sends the funds to the lender, who then releases the funds to you  as you make the repairs. They do it this way because if you never make the repairs the value of the collateral is decreased, and the lender wants to protect their investment. There is no mortgage. You will get the funds directly, and the insurance company will not force you to make the repairs especially if the repairs are cosmetic in nature.  In either case if you don't fix the cause of the leak, and make repairs to the site around the leak, you will run into a problem in the future if the leak continues, or the rot and mold continues to spread.  If you file a future claim they are likely to ask for proof of the original repair. If you didn't make it, they are likely to deny the second claim. They will say the cause is the original incident and if you had made the repair, the second incident wouldn't have happened. They are likely to drop you at that point. If you try to sell the house you will have to disclose the original leak, and the potential buyers will want you to make the repairs. Any mold or rot spotted by the home inspector will be a big issue for them. It is also likely to be an item that they will be advised to demand that you get a legitimate company to make the repair before the deal can move forward, and won't negotiate a lower price or a credit for $x so they can get the repair done. Some will just cancel the deal based on the inspection report. I get exactly what you mean and I agree, but that reality of it is that that's not always possible. I have friends who are just barely able to pay rent and have to use the rest of their income to eat bread and butter for every meal. They work full-time and has two jobs (at one point he had three just to stay afloat after getting injured on his way to work), and he's not able to save up anything and even when he tracks his balances, he teeters on the fine edge of being evicted for not paying rent, starving to pay bills, or overdrafting. No, you cannot. 401k must not be discriminatory, i.e.: you cannot have different matching for different employees.