Title insurance is the line on a closing statement that buyers most often skim, partly because it is unfamiliar and partly because it is one of the few things about a Texas purchase you genuinely cannot negotiate. Understanding what it does, and what part of the bill is actually variable, is worth the ten minutes.
What it insures against
Most insurance covers things that might happen. Title insurance covers things that already happened and have not been discovered yet.
When a property changes hands, its ownership history is examined for anything that could undermine your claim: a lien that was never released, an error in a recorded document, a boundary or easement problem, a deed signed by someone who lacked authority, an heir with an interest nobody knew about, forgery, fraud. The search finds most of it. The insurance covers what the search missed.
It is paid once, at closing, and it lasts as long as you hold an interest in the property. There is no renewal and no monthly premium.
Why the price is the same everywhere
Texas is unusual here. The basic premium for title insurance is promulgated by the Texas Department of Insurance, which means the state sets it rather than the market. The same coverage at the same purchase price costs the same at every title company in Texas.
So the common advice to shop around for title insurance does not apply to the premium here. What it does apply to is everything else: escrow fees, settlement fees, document preparation, courier and wire charges, and the endorsements added to the policy. Those are not promulgated and they do vary.
The other thing that varies, and matters more than the fees, is competence. A title company that answers the phone in the last week, catches a payoff discrepancy before closing day, and schedules a remote signing without drama is worth considerably more than a small difference in an escrow fee.
Two policies, two different beneficiaries
Almost every financed purchase involves two policies, and buyers routinely assume the one they are paying for protects them.
The lender's policy protects the lender's lien position, in the amount of the loan, declining as the loan is paid down. If a title defect emerged, this policy makes the lender whole. It does nothing for your equity.
The owner's policy protects your ownership interest, in the amount of the purchase price. This is the one that matters to you.
In most of Central Texas the seller customarily pays for the owner's policy, which is a genuine benefit of local convention. Confirm it is in your contract rather than assuming, and never let the owner's policy be dropped to save money at closing.
The survey question
Title insurance and the survey are connected. Many boundary and encroachment issues are only visible on a survey, and coverage for them depends on the title company having one it will rely on.
Texas has a shortcut worth knowing: rather than commissioning a new survey, the parties can often use the seller's existing one accompanied by a T-47 affidavit, in which the seller swears nothing has changed since it was made. That saves the buyer the cost of a new survey where the title company accepts it.
Where it does not work: where a fence, deck, pool, or addition has gone in since the survey was drawn, or where the seller cannot honestly sign the affidavit. That is a case for a new survey, and it is money well spent rather than a fee to avoid.
What the commitment is telling you
Before closing you receive a title commitment, which sets out what the policy will cover and, more importantly, what it will not. The exceptions section is the part to read.
Typical entries include recorded easements, mineral rights reserved to a previous owner, restrictive covenants, and rights of parties in possession. Most are ordinary. Some are not, and an easement running through the part of the garden you intended to build on is exactly the sort of thing that is disclosed here and ignored.
Read it during the option period, while you still hold an unrestricted right to terminate. See the option period explained.
Mineral rights, since this is Texas
Surface and mineral estates can be severed here, and in many Texas properties the minerals were separated from the surface generations ago. This appears in the commitment as an exception.
For an ordinary house in central Austin this is usually of no practical consequence. On acreage, particularly outside the city, it can matter a great deal, because the mineral estate is generally dominant and its owner may have rights of surface access. If you are buying land, ask specifically what conveys.
What we do about it
We read the commitment rather than forwarding it, and we flag the exceptions that actually affect what you can do with the property. We will also tell you when a seller's survey plus a T-47 is genuinely fine and when it is worth paying for a new one, which is not the same answer on every house.