What is Title Insurance?

Title insurance protects buyers and lenders from financial liabilities arising due to faulty title or hidden liens associated with the property. There are two types of title insurance policies. These are the Lender’s policy and the Owner’s policy. 

Lenders approve a loan until they buy the lender’s title insurance or lender’s policy. This way the lenders are safeguarded against defaults arising due to the title. On the other hand, the owner’s policy protects the buyer in case they are unaware of any title defects or liens.

How much does Title Insurance Cost in Illinois?

Illinois counties with maximum home buying and selling activities charge quite a lot in title insurance compared to other states. Most real estate transactions in Illinois take place around the Chicago area. So we will consider costs applicable in these counties. 

A $300,000 property will cost around $1,920 for the owner’s title with a flat $525 as lender’s title policy, totaling $2,445. 

Take note that this price does not include the cost of endorsements. Endorsements or liens on a property will cost further. 

How to calculate title insurance in Illinois?

There are no slabs or price brackets in Illinois, unlike in other states. The minimum owner's policy one has to pay is $1,700. This is applicable to properties ranging from $0-$170,000. After that, the policy price successively increases by $20 for every $10,000 increase in the property rate. 

You are supposed to add $2 for every $1,000 increase in the property if you are buying a property worth more than $1m.

To give a perspective, these 3 use cases give you a complete idea of what to expect when closing in Illinois. 

  • For a purchase price of a $200,000 property in Illinois with a 20% down payment ($70,000), the cost of title insurance policy and lender's policy are $1,760 and $525 respectively. 
  • For a purchase price of a $200,000 property in Illinois bought with full cash, the cost of the title insurance owner's policy is $1,760. 
  • For a purchase price of a $500,000 property in Illinois with a 20% down payment ($100,000), the cost of title insurance owner's policy and lender's policy are $2,380 and $525 respectively.
  • For a purchase price of a $500,000 property in Illinois bought with full cash, the cost of the title insurance owner's policy is $2,380. 
  • For a purchase price of a $1,000,000 property in Illinois with a 20% down payment ($200,000), the cost of title insurance owner's policy and lender's policy are $3,510 and $525 respectively. 
  • For a purchase price of a $1,000,000 property in Illinois bought with full cash, the cost of the title insurance owner's policy is $3,510. 

Who pays for Title Insurance in Illinois?

The seller usually pays for the owner’s title policy while the buyer pays for the lender's policy in Illinois.