What is the purpose of owner's title insurance and who typically pays for it?

Owner's title insurance protects the buyer against title defects that exist as of the date of purchase, including undisclosed liens, back taxes owed by a prior owner, forged signatures on past deeds, clerical errors in public records, and competing claims of ownership. It is paid as a one-time premium at closing and provides coverage for as long as you or your heirs own the property. Lender's title insurance (a separate policy required by the mortgage lender) only protects the lender, not the buyer. In many states, the seller pays for the owner's policy as part of the deal, though this is negotiable.