Title insurance in Texas is a one-time policy, paid at closing, that protects you and your mortgage lender against ownership problems rooted in a property’s past: unpaid liens from a prior owner, a forged deed somewhere in the chain of title, an unknown heir, a clerical error in the county records. The Texas Department of Insurance (TDI) sets the policy forms and the premium rates, so every title company in the state sells the same coverage at the same price. What varies is service, not the policy.
The Two Policies You’ll See at Closing
Texas issues title insurance on two standardized forms, and most financed purchases involve both.
The Owner’s Policy (Form T-1) protects you as the buyer. It covers your financial interest in the property against title defects, undisclosed liens, forgery, and recording errors, and it stays in effect for as long as you or your heirs own the home. No renewals, no monthly premium.1Texas Department of Insurance. Owner’s Policy of Title Insurance Form T-1
The Loan Policy (Form T-2) protects your lender’s mortgage lien: its validity, its enforceability, and its priority over other encumbrances. Lenders almost always require it. Coverage decreases as you pay down the loan and ends when the mortgage is paid off. It does not protect you personally, which is the reason to buy an Owner’s Policy even though the lender is already requiring a Loan Policy.2Texas Department of Insurance. Loan Policy of Title Insurance Form T-2
Because the forms are standardized by TDI, the coverage language is identical across title companies.3Legal Information Institute. 28 Texas Administrative Code 9.1
What Title Insurance Covers
The Owner’s Policy protects against problems that existed at or before the date you bought the property. Under the T-1 form, covered risks include someone else asserting a claim to your title, any defect in the title, undisclosed liens or encumbrances, forged or fraudulently executed documents, and documents that were not properly recorded.1Texas Department of Insurance. Owner’s Policy of Title Insurance Form T-1
In real cases, the covered problems tend to fall into three groups. Clerical errors are the most common: a misspelled name, a wrong lot number, a document that was signed but never recorded. Unsatisfied debts come next: a prior owner’s mortgage that was paid but never released, or a contractor’s lien filed for unpaid work. The most expensive claims involve competing ownership: an unknown heir surfacing after a probate, a forged deed in the chain of title, or a prior transfer made under fraud or duress. When these disputes reach litigation, the insurer either resolves the claim or pays for your defense and any covered loss up to your policy limit.
The Loan Policy covers similar ground plus items specific to the mortgage: an invalid or unenforceable lien, loss of lien priority, and defects in the mortgage’s execution or recording.2Texas Department of Insurance. Loan Policy of Title Insurance Form T-2
You can also add endorsements for specific risks. The T-19.1 endorsement, for example, covers damage to improvements from the exercise of existing mineral extraction rights, which matters in a state where mineral rights are often severed from surface ownership.
What Title Insurance Does Not Cover
The exclusions in the T-1 form catch many buyers off guard.1Texas Department of Insurance. Owner’s Policy of Title Insurance Form T-1
- Government regulations, including zoning, building codes, environmental restrictions, and subdivision rules. If the city won’t let you use the property as planned, title insurance does not help.
- Eminent domain, meaning the government’s power to take private property for public use.
- Any defect or lien you created, agreed to, or knew about before buying without disclosing it to the title company.
- Problems that arise after closing. Coverage is for defects existing at or before the policy date.
- Bankruptcy-related transfers, if the sale to you is later voided as a fraudulent or preferential transfer.
- Real estate tax liens that attach between the date of the policy and the date the deed is recorded.
Beyond these general exclusions, every policy has a Schedule B that lists property-specific exceptions the title company chose not to insure against: existing easements, restrictive covenants, mineral reservations, and anything else the search turned up. Reviewing Schedule B before closing is the single most important step, because each line item is a risk the policy leaves on you. If Schedule B lists an unresolved lien or a covenant that limits how you want to use the property, you can negotiate with the seller to clear it before closing.
How Much Title Insurance Costs
Texas is one of the few states where the government sets title insurance premiums. Every title company charges the same base rate, calculated from a sliding formula published by TDI: as property value rises, the per-dollar rate falls.4Texas Department of Insurance. Title Insurance Basic Manual
Under the rates effective March 1, 2026, the premium on properties valued between $100,001 and $1,000,000 is figured by subtracting $100,000 from the policy amount, multiplying the result by 0.00494, and adding $780.5Texas Department of Insurance. Texas Title Insurance Premium Rates Effective March 1, 2026 Sample premiums:
- $200,000 home: $1,274
- $250,000 home: $1,521
- $500,000 home: $2,756
- $750,000 home: $3,991
These are one-time payments made at closing. There are no monthly premiums and no renewals.5Texas Department of Insurance. Texas Title Insurance Premium Rates Effective March 1, 2026
Simultaneous Issue Discount
When you buy an Owner’s Policy and a Loan Policy at the same time, which is standard for any financed purchase, you don’t pay full price for both. Under Rate Rule R-5, the Owner’s Policy is charged at the basic rate and the Loan Policy costs $100, provided the loan amount doesn’t exceed the purchase price and both policies cover the same property.6Texas Department of Insurance. Title Insurance Basic Manual Section III – Rate Rules On a $250,000 home, that’s $1,521 for the Owner’s Policy and $100 for the Loan Policy. If the loan exceeds the purchase price, the formula adjusts, but the combined cost is still well below two full premiums.
Refinance Credit
Refinancing requires a new Loan Policy, and Rate Rule R-8 builds in a discount based on the age of your existing policy. Refinance within four years and you get a 50% credit on the new premium. Between four and eight years, a 25% credit. After eight years, you pay the full basic rate.7Texas Department of Insurance. Formula for Figuring Rate Rule R-8 Credits
Who Pays, and Whether You Can Deduct It
Who pays the Owner’s Policy premium is negotiable and follows local custom. In many Texas counties the seller pays; in parts of the Dallas-Fort Worth area the buyer pays. The purchase contract controls, so raise it during negotiation.
Title insurance premiums on a primary residence are not tax-deductible. The IRS lists title insurance among items homeowners cannot deduct.8Internal Revenue Service. Tax Benefits for Homeowners The premium can, however, be added to your cost basis, which may reduce capital gains if you later sell.
The Title Commitment and Schedule B
After you sign a purchase agreement and pick a title company, the company runs a title search through county records going back decades, tracing every transfer, lien, easement, and encumbrance. It then issues a title commitment: a preliminary document setting out the terms under which the final policy will be issued.
Schedule A confirms transaction details, including the buyer’s name, lender information, and the property’s legal description. Schedule B lists every exception the policy will not cover. That is the schedule to read. Anything appearing on it is a risk the insurer is not taking on, and the time to address it is before closing, not after. Your real estate attorney or the title company can explain what any given exception means in practice.
At closing, the title company confirms every condition in the commitment has been met, records the deed and mortgage with the county clerk, and issues the final policy.
Filing a Claim, and What to Do if It’s Denied
If a covered defect surfaces after closing, you file a claim with your title insurance company. The insurer investigates using public records, the original title search, and any related legal documents. A valid claim is typically handled in one of three ways: the insurer negotiates directly with the third party asserting a claim against your property, pays your legal defense if the dispute goes to litigation, or compensates you for covered losses up to your policy limit.
Claims are also denied, usually on the ground that the issue falls under a policy exclusion or a Schedule B exception. Start by contacting the title company directly to discuss the denial.9Texas Department of Insurance. Get Help With Title Insurance Complaints If that doesn’t resolve it, you can file a formal complaint with TDI. The process generally runs 30 to 40 days: the company has 15 days to respond, with one possible 10-day extension, and a TDI specialist then reviews the file and issues a determination.10Texas Department of Insurance. Consumer Complaint Process The complaint process is free and worth pursuing even if you also plan to hire an attorney, because it can push the insurer to reconsider a denial it would otherwise let stand. Some disputes can also be resolved through mediation or arbitration, which are usually faster and cheaper than a lawsuit.