A: Yes, if you refinance your mortgage you do need to get a new title insurance policy. But if it has been less than five years since you took out your previous policy, you will likely qualify for a cheaper “reissue rate.”
You may also be able to save money by comparing rates offered by various title insurance companies. In many states, however, the rates are set by the government and are not negotiable.
The reason lenders require you to take out title insurance is to protect themselves against any potential disputes over the ownership of your property. If, for example, you bought a property that was co-owned and one of the previous owners neglected to sign the transfer deed, you could, down the road, be faced with a claim against your property. Title insurance protects the lender against loss resulting from any such claims.
Unlike other forms of insurance where you are typically required to pay a monthly or annual premium, you pay for title insurance only once at the time of closing, unless you refinance your mortgage. The reason you must get a new title insurance policy when you refinance is in order to protect the lender from any liens against your property that may have occurred between the time your previous policy was issued and the time of your refinance.
Along with title insurance that covers the lender, there is a second form of title insurance that covers you, the buyer, against losses resulting from claims against your property. This personal title insurance is not required but is advisable to protect your own investment interests.
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