Do You Need Owner's Title Insurance in Maryland?

You're days from settlement on a home in Bethesda, the closing disclosure lands in your inbox, and there it is: a line for owner's title insurance running a few thousand dollars. Your lender never mentioned it as a requirement, so the obvious question is whether you actually need it — or whether it's one more fee you can strike.

Here's the short version: you're not required to buy it, but it's the one protection at the closing table that's actually for you. Everything else about the title work protects your lender. This is the piece that protects your ownership.

What owner's title insurance covers in Maryland

When you buy a home, you're not just buying the house — you're buying its title, the legal right to own it free and clear. A title company or settlement attorney runs a search of the land records to confirm the seller can actually convey that clean title. But a search can only find what's been recorded correctly, and public records are full of gaps.

Owner's title insurance protects you if something the search missed — or couldn't have caught — surfaces after you own the home. In Maryland, a standard owner's policy typically covers:

• Unreleased or undisclosed liens — an old deed of trust the prior owner never paid off, a mechanic's lien from a contractor, or unpaid property taxes.
• Forgery and fraud in the chain of title — a deed signed by someone impersonating the true owner.
• Unknown heirs or missing signatures — a relative with a legitimate claim who never signed away their interest.
• Errors in the public record — a misindexed document, a clerical mistake, or a boundary described incorrectly in a prior deed.
• Judgments and assessments recorded against a former owner that attach to the property.

If a covered claim comes up, your title insurer pays to defend your ownership in court and covers your loss up to the policy amount — the full price you paid, plus legal costs. Without a policy, that's a fight you'd fund out of pocket, and the loss could reach the value of the home.

One important limit: items the search does find and lists as exceptions — recorded easements a title search turns up, rights-of-way, or an HOA declaration — generally aren't covered by a standard policy, because you're buying the home with those already disclosed. That's exactly why reading the title commitment matters, and it's a conversation I have with every buyer before we clear to close.

In this market, that search does real work. On Bethesda and Montgomery County closings, it regularly turns up an unreleased deed of trust from a refinance the seller forgot about, an unpaid front-foot benefit or WSSC assessment, a contractor's lien from a recent renovation, or a boundary that a decades-old deed describes differently than the current survey. Most of those get cleared before settlement. Owner's title insurance is what stands behind the ones that slip through — or the ones no search could have found, like a forged signature three owners back.

Owner's policy vs. lender's policy — they're not the same thing

This is where most buyers get confused, and it's the single most useful thing to understand.

If you're financing the purchase, your lender will require a lender's title policy. It's built into your closing costs, and it protects the lender's investment — nothing more. Its coverage equals your loan balance and shrinks as you pay the mortgage down. The day you pay off the loan, that policy is worth nothing to you.

An owner's title insurance policy is the separate, optional coverage that protects your equity and your right to the property. It's issued for the full purchase price, and it lasts as long as you or your heirs own the home. Two policies, two different beneficiaries — and only one of them is you.

Buyers sometimes assume the lender's policy has them covered because it shows up on the same settlement sheet. It doesn't. If you skip the owner's policy, the lender is insured and you are not.

There's one more practical difference. If a claim lands against your home five years from now, your own policy puts the insurer's duty to defend squarely on your side of the table — the difference between a phone call to your title company and hiring your own lawyer to protect equity you've already built.

What it costs in Montgomery County

Owner's title insurance is a one-time premium paid at settlement — there's no annual renewal. In Maryland, expect it to run roughly 0.5% to 1% of the purchase price, which puts it in a real range on Bethesda-area homes:

• On a $700,000 home, plan for roughly $3,500 to $4,500.
• On a $1,200,000 home, roughly $5,500 to $7,500.
• On a $2,000,000 home, well into five figures.

A few things that move the number in your favor:

• Simultaneous issue. When your owner's and lender's policies are written together at the same closing, the lender's policy is added for a small fee — often under $100 — instead of a second full premium. Buying both at once is far cheaper than buying them separately.
• Reissue rate. If there's a recent prior owner's policy on the property, or you're refinancing later, you may qualify for a discounted reissue rate.
• Who pays is negotiable. In Montgomery County, the buyer customarily selects the settlement company and pays the owner's premium, but that's spelled out in your contract and can be part of what you negotiate with the seller.

The premium itself is filed with the Maryland Insurance Administration, so the underwriting rate is fairly consistent from company to company. The settlement and title-service fees stacked around it are not — those vary, and you have every right to shop and compare. You choose your title company; a lender or seller can't force you to use theirs.

Standard vs. enhanced — and how to decide

Maryland buyers can usually choose between a standard owner's policy and an enhanced one. The enhanced policy costs modestly more and adds coverage that fits a lot of Bethesda and Montgomery County situations — protection against certain post-closing forgeries, some building-permit and zoning violations left by a prior owner, and specific boundary or encroachment problems a survey would flag. On older homes in Chevy Chase, Kensington, or Somerset, where additions and renovations pile up over decades, that broader coverage can be worth the small step up in premium.

For a newer townhome in North Bethesda or a condo with a professionally managed association, the standard policy is often plenty. For a 1940s or 1950s house in Chevy Chase that's been added onto, re-roofed, and re-permitted by a string of owners, the enhanced policy's broader coverage tends to earn its keep.

So do you need owner's title insurance? Legally, no. Practically, on a six- or seven-figure purchase, going without it means betting your entire equity that a title search was flawless and that no fraud, error, or missed claim exists anywhere in the property's history. For a one-time cost that's a fraction of your down payment, most buyers decide that's not a bet worth making.

Where I add value is helping you read the title commitment before you sign, spotting the exceptions that actually matter, deciding between standard and enhanced for your specific home, and making sure you're working with a reputable local settlement company — which also protects you from the wire-fraud schemes that target buyers right when they're moving funds to close. If a title issue is genuinely thorny, I'll point you to a Maryland real estate attorney before it becomes a problem.

If you're under contract in Bethesda or anywhere in Montgomery County and want a straight read on whether to take the owner's policy — and which version — I'm happy to walk you through it. Reach out anytime.