- Title insurance is not required in Ontario and does not replace legal advice.
- It can cover title defects, liens, encroachments, survey and public-record errors and title fraud.
- Common exclusions include known defects, environmental hazards, native land claims and issues only a new survey would reveal.
- If you choose title insurance, your lawyer should explain the searches they will not perform and what those would reveal.
Somewhere between signing the agreement and closing, your lawyer or lender may suggest that you buy title insurance. It is one more cost on top of everything else, so it is fair to ask what you are actually getting and whether it replaces other protections, such as a survey.
This article explains in plain language what title insurance generally covers, what it commonly leaves out and what your lawyer should tell you about it. Policies differ between insurers, so treat this as a starting point for questions rather than a summary of any one policy.
What title insurance is and is not
Title insurance is not required in Ontario, and it does not replace legal advice. It is an insurance policy that protects against certain problems with the ownership (title) of the property you are buying.
It is different from home insurance, which deals with damage to the house and its contents. Title insurance is about problems with your legal right to the property, many of which exist before you buy.
What a policy can cover
Coverage depends on the policy, but title insurance can generally protect against these kinds of problems.
- Title defects.
- Liens.
- Encroachments.
- Survey and public-record errors.
- Title fraud.
A policy may also protect against lawyer error. Read the policy wording, because the extent of the coverage and any dollar limits are set by the insurer's terms.
What it commonly excludes
Every policy has exclusions. Common exclusions include known defects, environmental hazards, native land claims and issues that only a new survey would reveal.
| Topic | Usually covered? | Notes |
|---|---|---|
| Title defects, liens, public-record errors | Can be covered | Depends on the policy wording |
| Title fraud | Can be covered | Ask how a claim would work |
| Encroachments and survey errors | Can be covered | Issues only a new survey would reveal are commonly excluded |
| Defects you already know about | Commonly excluded | Tell your lawyer about anything you know |
| Environmental hazards | Commonly excluded | Separate inspections may be worth considering |
| Native land claims | Commonly excluded | Check the policy wording |
Does it replace a survey?
Sometimes. Some policies can replace a new survey, with most lenders accepting this. The word most is important: it does not mean every lender, so confirm with your own lender.
There is a trade-off. Issues that only a new survey would reveal are a common exclusion. A policy can stand in for a survey for lender purposes, but it does not give you the same information about where the boundaries and buildings actually are. If a fence, addition, shed or driveway matters to you, ask your lawyer whether a new survey is worth getting.
If you choose title insurance, the Law Society of Ontario's guidance says your lawyer should advise you about the searches the lawyer will not perform, namely zoning, encroachments and survey issues, and about what those searches would reveal. That conversation is part of making an informed choice.
What to do next
- Ask your lawyer which risks the proposed policy covers and which it excludes.
- Ask what searches your lawyer will not be doing if you choose title insurance, and what they could reveal, including zoning, encroachments and survey issues.
- Ask your lender whether a policy is acceptable in place of a new survey.
- Tell your lawyer about anything you already know about the property, such as an unpermitted renovation, a boundary dispute or a neighbour's structure, since known defects are commonly excluded.
- Ask for a copy of the policy and keep it with your closing documents.
- Compare the cost to what a new survey would cost and to the risks you are concerned about.
Title insurance can be a sensible tool, but it is one part of a purchase and not a substitute for legal advice. If you are unsure, ask your lawyer to explain the choice in terms of your particular property.
Frequently asked questions
Is title insurance mandatory in Ontario?
No. Title insurance is not required in Ontario and does not replace legal advice. Your lender may have its own requirements, so ask which ones apply to you.
What does title insurance usually cover?
It can cover title defects, liens, encroachments, survey and public-record errors and title fraud, and may protect against lawyer error. The exact coverage depends on the policy.
What is usually not covered?
Common exclusions include known defects, environmental hazards, native land claims and issues only a new survey would reveal. Read the exclusions in your policy before you buy.
Can title insurance replace a survey?
Some policies can replace a new survey, and most lenders accept this. Because issues only a new survey would reveal are commonly excluded, ask your lawyer whether a survey still makes sense for your property.
Sources
- FSRA – Understanding title insurance — fsrao.ca
- Law Society of Ontario – Residential Real Estate Transactions Practice Guidelines — lso.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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