How Much Is Title Insurance in Arizona in 2024?

When it comes to selling your home in Arizona, you’ll have to consider closing costs. Part of closing costs is title insurance. Title insurance is a type of insurance policy that protects home sellers, buyers, and the mortgage lender from issues with the title (title defects) or a hidden lien against the home.

Title defects can include claims against the property, errors with documentation, forgery, encroachments, or easements. Encroachment occurs when a property invades another, such as a neighbor building part of their home onto your land or vice versa. An easement grants another individual or party access to use your property for a fee. 

Why Title Insurance Is Necessary in Arizona

Title insurance protects everyone involved in a sale against the cost of property ownership issues. Mortgage lenders typically require buyers to purchase an Arizona lender’s title insurance policy to protect against defects on the title. Meanwhile, an Arizona owner’s title insurance policy protects the owners of the property against defects. 

It is not mandatory to purchase owner’s title insurance in Arizona, but it is strongly advised. Having this type of insurance can protect you and your property from defects in the title, which could otherwise result in hefty financial consequences. 

Why Do You Need Title Insurance?

Buying title insurance is often necessary to obtain a mortgage. But there are other benefits for buyers and sellers when purchasing title insurance:

Protect Yourself Against Title Defects

Defects can be surprising to buyers and sellers alike, and they can halt a sale in its tracks. Having coverage helps you identify these risks and cover legal fees associated with defending your ownership.

Common title defects include things like unpaid taxes, liens, claims from third-parties, and liens. Coverage offers peace of mind against any of these issues to ensure you can confidently move through settlement.

Meet Lender Requirements

Buyers need to purchase Arizona lender’s title insurance to secure a loan. The majority of mortgage lenders will require you to purchase title insurance before they will offer you a mortgage. This coverage protects their interest in the property against defective titles.

Although the lender’s title insurance doesn’t directly benefit buyers, it does offer security to the lender and ensure borrowers can obtain their loan. 

Safeguard Your Investment 

Compared to the potential financial burden of resolving title issues, the cost of title insurance in Arizona is relatively low. Even if you don’t ever actually need to use it, the cost of coverage is small for such a significant investment. 

Average Costs of Title Insurance in Arizona

The average cost of title insurance in Arizona is 0.5% to 1.0% of the home’s sale price. The cost of title insurance increases the more a house sells for; a property sold for $50,000 to $250,000 would have a title insurance cost between $738 to $1,228. Meanwhile, a property that sells for $1 million and above will have a title insurance policy starting at $16.50 per $10,000 in excess over $1,00,000. 

According to Zillow, the median home sale price in Arizona was $410,000 at the end of 2023. Bankrate reports this slightly lower at an average of $352,536. Both reflect an increase in sales from the previous year. 

The costs of title insurance vary depending on whether you’re a buyer or seller. There are some key distinctions that influence the final cost of a policy: 

As a homebuyer in Arizona: 

• You have to pay for a lender’s policy. Most insurance providers require lender’s title insurance to cover their cost. Many companies charge a fixed fee of around $315 for lender’s coverage regardless of the property value. 
• Shop around for an owner’s policy. Buying an owner’s policy protects your future ownership rights of the property. You may also be able to lower costs by bundling a lender’s and owner’s policy with the same provider.
• Consider add-on fees. Be sure to closely examine any add-on fees an insurance provider may charge for their service, such as a title search. You can often negotiate these fees to lower the cost of your coverage. 

As a homeseller in Arizona:

• You don’t need to purchase title insurance — but it’s a good idea. Having owner’s title insurance in Arizona helps you protect yourself against financial costs incurred by defective titles. You will have coverage against claims, forgery, liens, and any other issue that could affect your sale and financial stability. 
• Shop around to find the right company. As with any other type of insurance, you should compare providers to make sure you find the best deal. Rates fluctuate among companies, so be sure to request several quotes before deciding on a company for owner’s title insurance. 
• Consider negotiating with the buyer. Although it isn’t common in Arizona, you can negotiate with the buyer to have them cover some or all of your owner’s title insurance as part of the closing costs. 

Who Pays for Title Insurance in Arizona?

Sellers typically pay for owner’s title insurance in Arizona; the buyers typically pay for lender’s title insurance. The seller will be charged on the settlement for the owner’s policy, and the buyer will be charged on the settlement for the lender’s policy. 

Although lender’s title insurance is often mandatory to get a mortgage, owner’s title insurance is optional. However, many home sellers still opt for coverage to protect their finances during a sale. 

How to Calculate Title Insurance in Arizona 

Several factors go into calculating title insurance, including: 

• The final cost of the property
• The loan amount (for buyers)
• The property type (residential vs. commercial)
• The county the property is located in
• The title insurance company you choose 

Every company has their own rates, so it’s helpful to compare free quotes from at least three title insurance providers in Arizona before you make a final decision. Generally speaking, expect the policy to cost between 0.5% to 1.0% of the final sale price. 

Ways to Save on Title Insurance

You can save money on title insurance by shopping around, comparing companies’ rates, bundling insurance policies, and negotiating add-on fees. Add-on fees tend to be extra fees for endorsements or title searches; make sure you closely read terms and conditions of an insurance policy and negotiate any fees that seem excessive to you.

Another option for lowering the cost of title insurance is bundling your policy with other insurances; most providers offer discounts for clients who purchase multiple insurance policies through them. 

Be sure to check for discounts on title insurance. Ask around and be sure to compare your options thoroughly. Ultimately, comparing companies and rates and negotiating your fees will help you get the best deal on title insurance in Arizona.

Title Insurance in Arizona

Title insurance is an essential part of the homebuying process in Arizona. Both buyers and sellers can buy coverage, though it is typically mandatory for buyers while optional for sellers. 

Having title insurance can protect you against defective titles by covering claims before they arise. They also guarantee loan priority, ensuring a secure transfer of property ownership. 

Sellers may not be legally required to buy title insurance, but it is highly recommended. Rather than being held liable for a defective title, you can have peace of mind knowing that you have the right coverage backing your sale. 

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