Title Insurance in Washington: Owner's vs. Lender's Policies

Every financed home purchase in Washington includes two title insurance policies — and the one that protects you, the buyer, isn’t the one you pay for. By custom, the seller buys the owner’s policy (protecting the buyer’s ownership), while the buyer pays for the lender’s policy (protecting the bank’s loan). Both are one-time premiums paid at closing — no renewals, no monthly bill — and on an illustrative $800,000 Kirkland sale the two together typically run somewhere in the low thousands of dollars combined, with the owner’s policy the larger of the two.

That’s the summary. The interesting part is what this strange product actually does, because title insurance is unlike every other insurance you own.

Insurance that looks backward, not forward

Homeowners insurance protects you against future events — tomorrow’s kitchen fire. Title insurance protects you against the past: problems with the chain of ownership that already exist, undiscovered, on the day you buy.

What kind of problems?

Risk	Real-world version
Unknown liens	A contractor recorded a lien against the previous owner; an old tax debt attached to the property
Forgery and fraud	A deed in the chain was signed by someone impersonating an owner
Missing heirs	A prior sale out of an estate missed an heir who still holds an interest
Recording errors	A legal description typo, a misindexed document, a release never recorded
Undisclosed easements	A neighbor holds recorded rights across your driveway
Marital/community-property gaps	Washington is a community-property state; a spouse who never signed off may retain a claim

Before issuing a policy, the title company searches the public record and publishes what it finds in a title commitment — the document listing what it will insure and what it excludes. Most issues get cured before closing. The policy exists for what the search can’t see: the forged signature looks genuine in the record; the missing heir appears nowhere.

If a covered claim surfaces, the insurer defends your title in court and compensates you up to the policy amount. Claims are genuinely rare — which is precisely why this coverage is cheap relative to what it protects — but the bad ones are catastrophic without it.

The two policies, side by side

	Owner’s policy	Lender’s policy
Protects	You — your equity and right of ownership	The lender — the loan balance only
Coverage amount	Purchase price	Loan amount (declines as you pay down)
Lasts	As long as you (and often your heirs) hold the property	Until the loan is paid off or refinanced
Who pays in WA (custom)	Seller	Buyer
Required?	No — but see below	Yes, by virtually every lender

The asymmetry trips people up: the lender’s policy you’re paying for does nothing for you. If a title defect wipes out the property, the lender’s policy makes the bank whole. Your down payment and appreciation are protected only by the owner’s policy.

Two pricing quirks worth knowing. Title insurance rates in Washington are filed with the state insurance commissioner, so pricing is published rather than haggled — though different title companies file different rates, so comparison is still possible. And when both policies are issued in the same transaction, the lender’s policy is written at a discounted simultaneous-issue rate, which is why the buyer’s side of the title bill is usually the smaller one. (How this slots into your overall cash-to-close: buyer closing costs line by line; the seller’s side: who pays what in Washington.)

”Should I get the owner’s policy?” — the honest take

In Washington you’ll rarely face this decision, because the seller customarily buys it for you. But the question comes up in three real situations: cash purchases (no lender forcing anything), negotiated deals where the buyer agreed to cover it, and refinances (where you buy a new lender’s policy — your original owner’s policy survives untouched, which surprises people).

The case for it is lopsided. A one-time premium — typically well under half a percent of the price — insures your entire stake in what is probably the largest asset you’ll ever own, against risks no inspection or diligence can rule out. The title search makes a claim unlikely; the policy exists for the failure modes of the search itself. Skipping the owner’s policy to save a thousand-ish dollars on an $800,000 asset is picking up nickels in front of a very slow but very heavy steamroller.

One upgrade decision does exist: standard vs. extended/homeowner’s coverage. Extended policies cover certain off-record risks (like some boundary and unrecorded-matters issues) for a higher premium, sometimes with survey requirements. Whether the upgrade is worth it depends on the property — ask your escrow officer or title rep to walk you through the difference for your specific purchase; that’s their job, and a question they answer daily.

Where it shows up in your closing

1. Mutual acceptance → escrow opens and orders title.
2. Title commitment arrives — typically within the first week or two. Read Schedule B (the exceptions): easements, covenants, and anything odd. Your contract gives you a window to object to title exceptions; unfixable surprises are an exit, not a shrug.
3. Curative work happens invisibly: old deeds of trust get released, liens paid from seller proceeds.
4. At closing, premiums are collected once, policies issue after recording, and the owner’s policy quietly protects you for as long as you own the home. There is nothing to renew, ever.

Title insurance is the rare closing cost that’s both cheap and load-bearing — the opposite profile of the agent fees that tower over it on the settlement statement. Those bigger numbers deserve the same daylight this post just gave the small one. That’s the Manaky Homes project: a free marketplace where Greater Seattle agents publish what they actually charge, in the open, so the largest line items on your closing statement stop being the least transparent ones. The waitlist for early access is open — and the tools library can help you model the rest of the transaction in the meantime.