What exactly does title insurance cover in Ontario?
Ontario title insurance policies are broad, but coverage varies somewhat by insurer and policy type. In general, a standard residential owner's policy covers losses arising from: title fraud (someone forging documents to steal or mortgage your property); forged documents in the chain of ownership; survey errors or discrepancies (your building is closer to the property line than the survey showed); encroachments that were not apparent before closing; zoning non-compliance for the existing use of the property; unpermitted work or work orders registered after closing that arose from pre-closing work; and liens or executions that were not found in the pre-closing search.
Lender's policies cover the same kinds of title issues but only protect the lender's mortgage interest, not the full market value of your equity.
Title insurance does NOT cover: environmental contamination; physical condition problems (roof leaks, foundation cracks, mould); issues that were disclosed to you or that you knew about before closing; and disputes over the property boundary if they were accurately described in a survey you had. It is also not a substitute for a home inspection — that covers the building's condition, while title insurance covers ownership rights.
Key takeaways
- Title insurance covers title fraud, forged documents, encroachments, survey errors, zoning non-compliance, and hidden liens.
- It does not cover environmental issues, physical defects, or conditions you knew about.
- A lender's policy protects the mortgage lender, not you — you need a separate owner's policy.
- Title insurance complements (but does not replace) a home inspection.