In a typical Illinois home sale, the seller pays for the owner’s title insurance policy and the buyer pays for the lender’s title insurance policy. That is the answer to who pays for title insurance in Illinois in most residential transactions, but it is a custom rather than a legal requirement. No Illinois statute dictates the split. It is a longstanding regional practice, strongest in northern Illinois, where the standard contract forms used by local broker associations build the arrangement directly into the agreement. Because custom drives it, every piece of it is negotiable.
Why the Seller Pays the Owner’s Policy
The owner’s policy protects the buyer’s ownership interest against problems that existed before closing but did not surface in the title search: undisclosed liens, conflicting ownership claims, recording errors, forged documents. The seller customarily pays for it as a one-time premium at closing. The reasoning is practical. The seller is the one promising to deliver clean title, so the seller funds the insurance that stands behind that promise.
The premium is tied to the sale price and set by a filed rate schedule, not a percentage. Under the 2025 schedule filed for Cook, DuPage, Kane, Lake, McHenry, Will, Grundy, and Kendall counties, the owner’s policy on a $300,000 home runs $2,350, and on a $500,000 home it runs $2,750.1Chicago Title. Schedule of Rates – Illinois Metro Counties 2025 Downstate rates can differ. Coverage lasts as long as the buyer or the buyer’s heirs hold an interest in the property, and if a hidden claim surfaces years later, the insurer covers the defense and any covered losses up to the policy limit.
Why the Buyer Pays the Lender’s Policy
When the purchase is financed, the lender requires its own policy — called a lender’s policy or loan policy — to protect its security interest in the property. The buyer or borrower pays that premium. The lender will not fund the loan without it, so on any financed purchase this cost is unavoidable for the buyer.
The lender’s policy is substantially cheaper when it is issued at the same time as the owner’s policy. This is called a simultaneous issue rate, and it bundles both policies through the same title company at a reduced combined cost. On the Closing Disclosure, the lender’s policy shows at its full standalone rate while the owner’s policy reflects the simultaneous discount, but the combined total is lower than buying the two separately.2Consumer Financial Protection Bureau. Factsheet – TRID Title Insurance Disclosures A cash buyer has no lender, needs no lender’s policy, and avoids that line item entirely.
How the Custom Varies Across Illinois
The seller-pays-owner’s and buyer-pays-lender’s split is not uniform statewide. In the Chicago metropolitan counties — Cook, DuPage, Lake, Kane, McHenry, and Will — the arrangement is so standard that it is pre-printed into the forms used by the Chicago Association of Realtors and suburban broker associations. Buyers and sellers in those counties rarely argue over it.
Central and southern Illinois often works differently. In some downstate counties the buyer and seller split the owner’s policy, and in others the buyer carries a larger share of the overall title insurance cost. These differences come from local practice, not state law, and they can change from one county to the next. If you are transacting in an unfamiliar part of the state, ask a local real estate attorney or title company what the customary split looks like in that county before you sign.
What You Can Negotiate
However firmly the custom is followed, the allocation of title insurance costs is a contract term. The standard Illinois purchase agreement includes a section assigning closing costs, and the parties can shift title insurance in either direction or split it any way they like. In a buyer’s market, a seller might absorb both policies as a concession. In a competitive market, a buyer might pick up the owner’s policy to strengthen an offer.
You also have the right under federal law to choose your own title insurance company. A seller cannot require you to use a specific provider as a condition of the sale. If a seller insists on one, that violates the Real Estate Settlement Procedures Act, and you could be entitled to recover up to three times the title insurance charges. Shopping around can turn up small differences in service fees and endorsements, though base premium rates in Illinois are filed with the Department of Insurance and tend to be consistent across companies within the same area.
Who Pays on a Refinance
Refinancing changes the picture because there is no seller. You will need a new lender’s policy, since the old one only covered the original loan, and you — the homeowner — pay for it. You generally do not need a new owner’s policy; the one you bought when you purchased the home remains in effect.3National Association of Insurance Commissioners. Consumer Guide to Title Insurance Ask the title agent about a reissue rate: for refinances, this reduced premium is generally available regardless of how old the existing policy is, as long as you can provide a copy of it. Locating your original title documents before you start the refinance is worth the effort.
Who Pays to Clear Title Problems
If the title search uncovers a defect — an unpaid contractor’s lien, a tax delinquency, a recording error from a prior transfer — the problem usually has to be resolved before the title company will issue a policy. The cost of clearing it almost always falls on the seller, because the seller is the one who agreed to deliver clear title. Curing a defect might mean paying off a lien from the sale proceeds, obtaining a release from a prior lender, or recording a corrective document. These costs sit outside the title insurance premium itself and are handled through the closing process.