Homeowners need to have title insurance so they can protect themselves from any pre-existing problems with the deed to their new property. When people buy a home with a loan, the lenders typically requires that they get this type of home insurance. Title policies insure a clean sale before the transaction even happens, rather than coming in to clean things up after the fact. Title and escrow companies can settle ownership disputes, problems from previous unpaid taxes and liens before finalizing a sale.
Title and escrow companies are limited to those capacities, though; so homeowners must understand that any problems which arise after the sale is final will not be protected by their title insurance. If someone puts a lien on the home after the purchase, for example, the homeowners are not protected by their title home insurance. Title policies only protect home buyers from problems that were caused by the previous owner, not problems that homeowners bring on themselves.
Title insurance is not necessarily required of homeowners, although lenders will probably require it of their borrowers, but home buyers should get it whether they have to or not. Escrow and title companies may only play a role in the homeownership process for a short time, but they play a very important role. Just imagine buying a home only to find that youíve inherited a tax debt, or that the heirs of the previous owner claim the property as their own. That is why people get title insurance, so they donít have to worry about those possibilities.