In a typical home purchase, the buyer pays for the lender’s title insurance policy, and who pays for the owner’s title insurance policy depends on where the property sits. In roughly half the country local custom puts the owner’s policy on the seller; in the other half it falls to the buyer; and in a handful of states the cost is split or left entirely to negotiation. None of that is set by federal law, and the purchase contract can override any local default.
Two Policies, Two Different Payers
A purchase financed with a mortgage usually generates two separate title insurance policies, and they protect different people.
The owner’s policy protects the buyer’s ownership interest for as long as the buyer or their heirs own the property.1ALTA American Land Title Association. How Long Does Title Insurance Policy Last? If a covered defect surfaces years later, the policy pays legal defense costs and reimburses the owner for losses. Coverage typically equals the purchase price.
The lender’s policy protects only the mortgage lender’s security interest. It does not cover the homeowner. If someone successfully challenges the title, the lender’s policy reimburses the lender for its outstanding loan balance, and the buyer is on their own for any lost equity.2Consumer Financial Protection Bureau. What Is Lender’s Title Insurance? Lenders require this policy as a condition of funding the mortgage, and the coverage decreases as the loan is paid down.
Both are one-time premiums paid at closing. There is no annual bill.
Who Pays for the Lender’s Policy
The buyer pays for the lender’s title insurance policy in virtually every transaction nationwide. The reasoning is simple: the lender will not fund the mortgage without it, so there is no real negotiation to be had. The premium is typically smaller than the owner’s policy premium, and both appear on the Closing Disclosure under closing costs.2Consumer Financial Protection Bureau. What Is Lender’s Title Insurance?
Who Pays for the Owner’s Policy by State
The owner’s policy is where custom varies. No federal rule governs it. Local tradition sets the default, and that tradition can shift at a state line or even a county line. The groupings below reflect prevailing industry practice, not law. A purchase contract can rewrite any of them.
States Where the Seller Typically Pays
- Alaska: seller pays; sometimes negotiated
- Arizona: seller pays the standard policy; buyer pays for extended coverage upgrades
- Arkansas: seller pays
- Colorado: seller pays; negotiable by contract
- Idaho: seller pays
- Illinois: seller pays
- Indiana: seller pays
- Kansas: seller generally pays, but varies by location
- Michigan: seller pays
- Missouri: seller generally pays, but varies by location
- Montana: seller pays
- Nevada: seller pays
- New Mexico: seller pays; negotiable
- Oregon: seller pays for standard coverage; buyer pays for extended coverage and endorsements
- Texas: seller pays
- Utah: seller pays; negotiable by contract
- Washington: seller pays for standard coverage; buyer pays for endorsements and extended coverage
States Where the Buyer Typically Pays
- Connecticut: buyer pays
- Delaware: buyer pays
- District of Columbia: buyer pays
- Kentucky: buyer pays for residential; negotiable for commercial
- Louisiana: buyer pays; sometimes negotiated
- Maine: buyer pays
- Maryland: buyer pays
- Massachusetts: buyer pays
- New Hampshire: buyer pays
- New Jersey: buyer pays
- New York: buyer pays
- North Carolina: buyer pays
- North Dakota: buyer pays
- Oklahoma: buyer pays
- Pennsylvania: buyer pays
- Rhode Island: buyer pays
- South Carolina: buyer pays
- Vermont: buyer pays
- Virginia: buyer pays; negotiable
States Where the Cost Is Split or Negotiable
- Alabama: negotiable statewide; seller customarily pays in some metro counties
- California: varies by county
- Florida: seller pays in most of the state, but buyer pays in some counties; negotiable for commercial deals
- Georgia: negotiable
- Hawaii: typically split 60/40 between seller and buyer for residential transactions
- Iowa: negotiable
- Minnesota: negotiable
- Mississippi: either party can pay; negotiable
- Nebraska: generally divided equally; varies by location
- Ohio: negotiable; often split equally
- South Dakota: divided equally
- Tennessee: negotiable
California and Florida both deserve a flag because the custom can flip inside a single state. In Florida, buyers in some southeastern counties pay for the owner’s policy while sellers cover it across most of the rest of the state. In California the custom shifts county by county. If you are buying in either state, ask your title company or real estate agent about the specific local practice before assuming anything.
When Custom Gets Overridden
Local tradition is a starting point, not a rule. Three forces regularly push the deal away from the default.
Market conditions. In a hot seller’s market, buyers routinely offer to cover the owner’s title insurance premium even in states where the seller traditionally pays. It is an easy concession that strengthens an offer without raising the purchase price. In a soft market, sellers may volunteer to pay for the owner’s policy to sweeten the deal, even where custom puts it on the buyer.
Negotiation leverage. Title insurance is one line item inside a larger closing-cost negotiation. A seller might agree to pay for it in exchange for a higher sale price, or a buyer might absorb it in return for seller-funded repairs. Experienced agents treat closing costs as a pool to be divided strategically rather than a line-by-line checklist.
Transaction type. New construction sometimes follows different customs than resales. Builders may have standing relationships with title companies and bundle the owner’s policy into their closing cost package, or they may pass the cost to the buyer regardless of local tradition.
Your Right to Shop, Even When Someone Else Pays
Who pays and who chooses are two different questions. Under the Real Estate Settlement Procedures Act, a seller cannot require you to buy title insurance from a specific company as a condition of the sale. A seller who violates this rule is liable for three times the amount charged for the title insurance.3Office of the Law Revision Counsel. 12 USC 2608 – Title Companies; Liability of Seller Even when the seller is footing the bill for the owner’s policy, the buyer keeps the right to pick the title company in states where the law is silent on selection customs.
Your lender must also provide a list of title insurance providers you can shop from. The services you are allowed to shop for appear in Section C of your Loan Estimate, and you are not limited to the lender’s list. Research from the Consumer Financial Protection Bureau suggests borrowers who comparison-shop for title services can save around $500.4Consumer Financial Protection Bureau. Shop for Title Insurance and Other Closing Services
One caveat: a handful of states set title insurance rates by law, which means every company in the state charges the same premium. Texas, Florida, and New Mexico use state-promulgated rates. Most other states use a file-and-use or prior-approval system where insurers propose rates that a state regulator reviews. In those states, shopping can turn up meaningful price differences.
How Much You Should Expect to Pay
Title insurance premiums are based on the purchase price (for an owner’s policy) or the loan amount (for a lender’s policy). Most states use a rate-per-thousand structure where the rate decreases in tiers as property value increases. A $200,000 home does not cost twice as much to insure as a $100,000 home.
As a rough benchmark, total title insurance costs typically run between 0.5% and 1% of the home’s purchase price. On a $400,000 home, expect somewhere in the range of $1,500 to $3,500 for both policies combined, depending on your state and the complexity of the title search. Lender’s policies alone cost significantly less than owner’s policies because they cover a smaller amount (the loan balance rather than the full purchase price) and the coverage decreases over time.
Ask About the Simultaneous Issue Rate
When both policies are purchased at the same time, most title companies offer a simultaneous issue rate that reduces the combined cost. The discount essentially adds a small surcharge for the lender’s policy on top of the owner’s policy premium, rather than pricing each at full rates.5ALTA American Land Title Association. How to Disclose Discounted Premium, Simultaneous Issue Rate on the Integrated Mortgage Disclosures The savings can run several hundred dollars. Confirm with your title company that they are applying it. Under CFPB rules, the discount is applied to the owner’s policy premium on your Closing Disclosure, while the lender’s policy shows at its full rate.
What About Refinancing
Refinancing requires a new lender’s title insurance policy. The original lender’s policy covers only the original loan, and once you pay that loan off through the refinance, the policy expires. The new lender needs its own protection against title issues that may have accumulated since the original purchase, such as contractor liens, judgments, or second mortgages recorded after closing.
You do not need a new owner’s policy when refinancing. Your original owner’s policy remains in force for as long as you or your heirs own the property.1ALTA American Land Title Association. How Long Does Title Insurance Policy Last? Many title companies also offer a reissue or refinance discount on the new lender’s policy if you can provide a copy of your prior policy. Ask about reissue rates before closing, because the savings can be substantial and the agent may not volunteer the discount.