Texas Title Insurance Explained 2026: Owner Policy, Loan Policy, and What's Excluded

Texas Title Insurance Explained 2026: Owner Policy, Loan Policy, and What's Excluded

What Texas Title Insurance Actually Protects (and the Gap Most Buyers Miss)

At almost every Texas residential closing, two title insurance policies are issued simultaneously. The lender requires one to protect their mortgage. The buyer pays for the other to protect their ownership. Most buyers sign the settlement statement, see a combined charge of roughly $2,300-$3,500 for a mid-range home, and move on without understanding what those dollars actually cover, and more critically, what they do not.

TL;DR: Texas is one of only three states (with Florida and New Mexico) where the Texas Department of Insurance (TDI) sets promulgated title insurance rates that every company must charge identically. Effective March 1, 2026, rates were reduced 6.2% following Commissioner Order No. 2025-9697. For a $400,000 home in Spring, TX, the owner's basic premium is $2,262 and the simultaneous loan policy costs a flat $100 more. The trap most buyers fall into: the standard basic rate does not include area-and-boundary (survey) coverage, meaning undiscovered encroachments and boundary disputes are excluded unless you pay for a T-19 endorsement or obtain a new survey.

How Texas Promulgated Rates Work in 2026

In most of the United States, title insurance rates vary by underwriter. Texas operates differently: under Title 11 of the Texas Insurance Code, TDI sets the premium rate and every title company must charge exactly that amount. You cannot negotiate a lower premium; any agent who offers a discount is violating state law.

On December 19, 2025, the Insurance Commissioner signed Commissioner Order No. 2025-9697 reducing the basic premium by 6.2%, effective March 1, 2026. The new 2026 TDI rate table applies to all policies issued from that date.

Rate formula for policies between $100,001 and $1,000,000:

1. Subtract $100,000 from the policy face value
2. Multiply the result by $0.00494 and round to the nearest dollar
3. Add $780

The Republic Title 2026 rate schedule shows key benchmarks: $400,000 = $2,262; $500,000 = $2,756; $600,000 = $3,250. The Texas promulgated premium bundles the title search, examination, and closing services that filed-rate states typically itemize separately, so direct interstate comparisons can overstate the cost difference.

The Owner's Policy (T-1): What It Covers and Why It Matters

The Texas Owner's Policy of Title Insurance, Form T-1, protects the buyer and owner for the purchase price amount. It remains in force for as long as you or your heirs own the property. You pay the premium once at closing; there are no annual renewals and no premiums if you own the home for 40 years.

What the T-1 policy covers:

• Undiscovered liens from a prior owner's unpaid contractor or supplier
• Forgery in the chain of title (a prior deed signed by someone impersonating the owner)
• Conflicting wills or heir disputes not resolved before transfer
• Missing heirs who emerge with a claim after closing
• Defective deeds (a deed with a missing signature, for example)
• Encroachments and boundary matters, when the T-19 endorsement is attached
• Claims of ownership based on matters that existed before your closing date

Defense costs: The title company also defends your title in court at its own cost. Legal defense in a contested title case can exceed $50,000 before a verdict. The T-1 covers those attorney fees.

Who pays in Texas? By custom, the seller typically pays for the owner's T-1 in most Texas residential transactions. This is negotiable in any TREC contract; confirm at contract execution, not at closing.

The Loan Policy (T-2): What the Lender Requires

Your lender will always require a Loan Policy of Title Insurance, Form T-2. This policy protects the lender's interest in the property up to the loan balance. As you pay down the mortgage, the effective coverage of the T-2 policy declines proportionally. When the loan is fully paid off, the T-2 policy terminates. Unlike the T-1, it provides no ongoing protection to the homeowner.

The T-2 policy covers the same categories of pre-closing title defects that the T-1 covers, but the benefit runs only to the lender. If a missing heir surfaces and challenges your ownership, the T-2 pays out to protect the lender's loan; without an owner's policy, you would face the claim without coverage.

R-5 Simultaneous Issue Credit: The $100 Deal

When both the T-1 owner's policy and the T-2 loan policy are issued at the same closing, the TDI Rate Rule R-5 applies a simultaneous issue credit. The owner's policy is issued at the full basic premium. The loan policy (T-2) is issued for a flat $100, regardless of the loan amount, provided:

• Both policies are issued simultaneously with the same effective date
• Each policy covers the same land (or a subset of it)
• The owner's policy reflects the loan as an exception in Schedule B
• The loan policy amount does not exceed the owner's policy amount

This makes the simultaneous issue the standard structure at closing: the seller pays for the owner's T-1 at the full premium, and the buyer pays the lender's $100 for the T-2. If the loan amount exceeds the purchase price (which can occur in some construction loans), a different formula applies. But for standard residential purchases, R-5 means the T-2 is effectively $100.

If a buyer declines to purchase an owner's T-1 policy, the lender still requires a T-2, and it is issued at the full basic premium rate, not at $100. Buyers who skip the owner's policy to save money often end up paying a larger T-2 premium than the T-1 would have cost.

What Title Insurance Does NOT Cover: The Exclusions

Understanding the exclusions in a Texas title policy is as important as understanding the coverage. Buyers frequently assume that title insurance protects them from all property-related legal disputes; it does not.

Standard exclusions from both the T-1 and T-2 in Texas:

• Zoning issues. Title insurance does not protect against a municipality's refusal to allow your intended use of the property.
• Post-closing issues. Title insurance covers only matters that existed before your closing date. Liens created after your purchase and disputes arising from your own actions are not covered.
• Mineral rights defects (usually). Most standard Texas policies do not cover mineral estate issues. Mineral rights in Texas are often severed from surface rights, an especially important exclusion in oil-producing counties.
• Survey matters without endorsement. Unless you purchase the T-19 area-and-boundary endorsement, any boundary dispute or encroachment that a current survey would reveal is excluded. This is the trap discussed below.
• Environmental issues. Contamination, underground storage tanks, or hazardous materials are not title defects and are not covered.
• Things you knew about. If the seller disclosed a known easement or encroachment and you proceeded to closing, that matter is excluded.

Common Endorsements: T-19, T-17, T-30, and T-42

Texas title policies are customizable through endorsements. Each endorsement adds coverage beyond the basic policy and carries an additional premium set by TDI.

T-19: Restrictions, Encroachments, Minerals (Area-and-Boundary Endorsement)

This is the most important endorsement for most Texas residential buyers. The T-19 adds area-and-boundary coverage to the policy, meaning the title company insures you against loss from:

• Encroachments of structures onto the insured land or onto adjacent property
• Violations of building setback lines shown on a recorded plat
• Discrepancies in acreage or square footage from what was represented

Without a T-19, your title policy has a gap large enough to drive a neighbor's fence through. An encroachment discovered after closing is excluded from the standard policy. The T-19 fills that gap.

Cost of the T-19 in 2026: - If purchased with survey deletion (area-and-boundary coverage based on a T-47 affidavit rather than a new survey): 5% of the basic premium as an additional charge for residential properties, per Texas National Title's endorsement guide - If purchased without survey deletion (standalone, based on a new survey): 10% of the basic premium for residential properties - For non-residential properties: 10% (with deletion) or 15% (standalone)

T-17: Planned Unit Development Endorsement

The T-17 endorsement covers properties in planned unit developments (PUDs), protecting against losses arising from the PUD designation itself. Under TDI Rate Rule R-11, the premium is a flat $25.00 per loan policy. Many master-planned communities in the Houston metro (Cinco Ranch, Bridgeland, Towne Lake) qualify as PUDs, and the T-17 is frequently required by lenders financing homes in those communities.

T-30: Tax Deletion Endorsement

The T-30 modifies the tax exception in Schedule B, providing coverage for ad valorem taxes for the year of closing and prior years that are not yet shown as public liens. Without T-30, current-year taxes that have not yet been recorded as a lien remain excepted from your policy. The premium is a small percentage of the basic premium.

T-42: Equity Loan Mortgage Endorsement

The T-42 is required on all loan policies insuring a Texas Section 50(a)(6) home equity loan, per Fannie Mae and most lenders' guidelines. It confirms that the homestead requirement is met, that no other home equity lien is of record within the prior year, and that the deed of trust prominently discloses the home equity lien designation. A T-42.1 Supplemental Coverage is typically attached alongside and expands the equity-specific coverage items.

Survey Matters: T-47 Affidavit vs New Survey vs Survey Deletion

The survey question is one of the most consistently misunderstood topics at a Texas residential closing. Here is how it works:

Option 1: New survey. A licensed Texas surveyor physically surveys the property and produces a current boundary survey. A residential survey in the Houston market typically costs $450-$900. The TREC One to Four Family contract specifies whether the seller or buyer provides the survey.

Option 2: T-47 affidavit with existing survey. The seller signs a T-47 Residential Real Property Affidavit (updated November 1, 2024) swearing that since the date of the existing survey, no new structures, fences, pools, or permanent improvements have been added and no construction on adjacent property has occurred near the boundary. If the title company and lender accept the T-47, the buyer can obtain T-19 coverage without ordering a new survey. The lender retains the right to require a new survey if the existing one is too old or the affidavit reveals changes.

Option 3: Survey deletion. The title company agrees to delete the survey exception from Schedule B and issue T-19 coverage for an additional 5% of the basic premium (on residential properties paired with a T-47 or new survey evidence). The title company accepts the survey risk in exchange for that premium.

The trap: A buyer who closes without T-19 and without a new survey has no protection against boundary or encroachment defects. If a neighbor's fence is 2 feet over your property line and you have no T-19 coverage, the title company owes you nothing. Legal and remediation costs fall entirely on you.

Worked Example: $400,000 Home in Spring, TX

Let's price out the title insurance at a typical Spring, TX closing on a $400,000 purchase with a $320,000 loan (20% down).

This $2,500 covers: - Full owner's policy protection for as long as you own the home (T-1) - Lender's loan policy for the life of the $320,000 mortgage (T-2) - Area-and-boundary survey coverage to protect against encroachments (T-19)

Without the T-19, you would pay $2,362 and have no survey coverage. That $113 savings is rarely worth the exposure.

Note on the loan policy amount exceeding the owner's policy amount: If you purchase with less than 20% down (say, a $360,000 loan on a $400,000 property), the R-5 simultaneous credit still applies because the loan amount does not exceed the owner's policy amount of $400,000.

The Five Major Texas Title Underwriters

When a claim arises, you deal with the underwriter behind your policy, not just the local title agency. The five major underwriters in Texas are Stewart Title Guaranty Company (founded in Galveston), First American Title Insurance Company, Fidelity National Title Insurance Company, Old Republic National Title Insurance Company, and North American Title Insurance Company. All five must use the same TDI-promulgated rate schedule, and policy language is standardized by TDI regardless of which underwriter issues the policy. Selection comes down to the local agency's service quality and claim-handling reputation.

How Defects Are Handled After Closing

If a title defect surfaces after purchase, the process begins with notifying your underwriter in writing. Do not delay; delayed notice can complicate a claim.

1. Notice to underwriter. Submit a written claim describing the defect, when it was discovered, and any supporting documents such as a demand letter or court filing.
2. Investigation. The underwriter reviews the title search, policy, and claim, and may engage a title attorney to evaluate the chain of title.
3. Defense or settlement. If the claim is covered, the underwriter defends title in court at its own cost or negotiates a settlement. Attorney fees for covered claims are included; you pay nothing.
4. Payout. If a covered loss is confirmed, the underwriter pays up to the face amount of the policy. The T-1 pays up to the purchase price; the T-2 declines with the loan balance.

Example: A Harris County homeowner receives a demand letter from a contractor claiming a mechanic's lien for work performed for a prior owner that was not found in the title search. With a T-1 policy, the underwriter investigates, and if the lien is a covered matter, pays to release it or defends the homeowner in court.

Texas Promulgated Rates vs Non-Promulgated States

Only three states (Texas, Florida, and New Mexico) set promulgated title insurance rates. In most other states, underwriters file their own rates with regulators and those rates vary by company, meaning a buyer can shop for a lower title premium. In Texas, every company charges exactly the same TDI-set amount; competition happens on service quality and additional closing fees, not on the insurance premium itself.

Texas is often cited as having higher title premiums than filed-rate states. A 2018 Texas Public Policy Foundation analysis ranked Texas fifth-highest nationally for total title costs on a $300,000 home. However, the Texas promulgated premium bundles the title search, examination, and closing services that most other states itemize separately, which makes a direct comparison complicated. The March 2026 6.2% rate reduction narrows that gap somewhat.

Internal Resources for Texas Buyers

Title insurance is one piece of the Texas purchase process. For how the TREC contract protects you during inspections and financing, read our guide to Texas earnest money and option periods. Buyers in the Spring and Tomball corridor will find MUD district details and property tax breakdowns in our Tomball 77377 buying guide. Homeowners planning to tap equity after purchase should review the Texas home equity loan vs HELOC guide, and investors can find cap rate context in our Texas real estate investor guide.

Frequently Asked Questions

Is a title search the same as title insurance in Texas?

No. A title search is the research process in which a title examiner reviews public records to identify existing liens, easements, or ownership disputes. Title insurance protects you against losses from defects in that title, including defects that a thorough search failed to discover. The Texas promulgated premium bundles the search, examination, and insurance into one fee, which is why it appears higher than standalone insurance premiums in states that itemize those services separately.

Can I shop for a lower title insurance premium in Texas?

No. TDI sets the basic premium rate, and every licensed title company must charge the exact same amount. What you can compare is the quality of their search process, closing responsiveness, claim-handling reputation, and additional non-regulated fees (wire fees, courier fees, escrow fees). Ask for an itemized fee sheet to compare total closing costs, not just the insurance premium line.

What is the T-19 endorsement and why do I need it?

The T-19 Restrictions, Encroachments, Minerals endorsement adds area-and-boundary coverage to your title policy, insuring you against losses from boundary disputes, encroachments, and violations of setback lines that a current survey would reveal. Without T-19, the standard T-1 policy excludes survey-related matters, meaning a neighbor's fence 3 feet over your property line discovered after closing is not a covered claim. For residential properties, T-19 coverage paired with a T-47 seller affidavit costs an additional 5% of the basic premium, which on a $400,000 home is approximately $113. It is one of the best value-for-dollar endorsements available in Texas.

How long does a Texas title policy remain in force?

A Texas Owner's Policy (T-1) remains in force for as long as you or your heirs hold an interest in the property. There is no expiration date and no annual premium. You pay once at closing and the coverage is permanent for your ownership period. A Loan Policy (T-2) terminates when the insured loan is paid off or refinanced.

Do I need title insurance if I am paying cash with no lender?

There is no lender requiring a T-2 in a cash purchase, but skipping the T-1 owner's policy exposes you to every category of pre-closing defect. A missing heir, a forged deed from 30 years ago, or an undiscovered mechanic's lien could result in a legal claim against your uninsured ownership. The R-5 simultaneous issue discount does not apply without a loan, so the T-1 costs the full basic premium, but the protection is permanent. Cash buyers actually bear more risk than financed buyers, since there is no lender's attorney performing a second title review.

What happens if the title company misses a defect during the search?

If the search fails to find a defect that a reasonable examination should have caught, and that defect later causes a covered loss, the title insurance policy pays the claim regardless of the title company's error. You do not need to prove negligence to collect on a valid title claim. The title company's potential liability is a separate matter from your coverage rights under the policy.

Let The Harbert Real Estate Group Guide Your Texas Closing

Title insurance questions arise most often at the contract stage, when buyers and sellers are negotiating who pays for the owner's policy, whether a new survey is required, and which endorsements apply to the specific property and loan type. Having an experienced agent on your side means those questions get answered before you are at a closing table reviewing a settlement statement you do not fully understand.

Erick Harbert and The Harbert Real Estate Group at Realty Right represent buyers and sellers across Spring, Tomball, Cypress, Klein, and the greater Houston area. Erick coordinates directly with title companies throughout the transaction to make sure the right endorsements are ordered, the survey question is resolved early, and the closing proceeds without surprises.

Erick Harbert The Harbert Real Estate Group at Realty Right 6605 Cypresswood Dr Ste 300, Spring TX 77379 Phone: (281) 305-2520 Email: [email protected] Website: harbertgroup.com