What does “premium payments” refer to in title insurance?

In title insurance, “premium payments” specifically refer to the one-time payment made at the closing of a real estate transaction. This upfront payment secures the title insurance policy, which protects the buyer and the lender from potential title defects or issues that could arise after the purchase.

The concept of a one-time payment at closing is important as it distinguishes title insurance from other forms of insurance, which may require ongoing premium payments or installments. Title insurance premiums are typically calculated based on the property's purchase price or loan amount, ensuring coverage for as long as the insured party maintains an interest in the property.

Understanding this aspect of premium payments is essential, as it highlights the unique nature of title insurance in providing a safeguard against past title issues rather than ongoing risk that requires repeated payments.