If you finance a cottage, the closing statement will have a title insurance line, and it is easy to assume that line covers you. According to the Michigan Department of Insurance and Financial Services (DIFS), the lender's policy protects the lender's interest and ends when the mortgage is paid off. The owner's policy is a separate policy, and it is the one that protects the buyer.
What an owner's policy covers
DIFS's Consumer Counselor lists the kinds of problems a policy is meant for: liens, lost, forged or incorrectly filed deeds, access problems, property taxes or mortgage payments a prior owner never made, and an unknown or missing heir who shows up claiming the property. It covers past defects nobody knew about at closing. It does not cover trouble that starts after you buy. If a covered defect does surface, the insurer defends your title and pays the settlement needed to clear it.
Cottages that have stayed in one family for decades, been split among siblings, or changed hands on a land contract are common up here, and those are the histories where an unrecorded deed or an heir nobody mentioned can turn up. Most cottages won't have one. The policy is for the one that does.
Who pays
DIFS says either the buyer or the seller can buy the owner's policy, that local custom varies, and that whoever pays gets to choose the title company. A lender can require its own policy and may insist on a specific provider. The premium is a one-time payment at closing, and the owner's policy is generally based on the purchase price while the lender's is based on the loan amount.
I'm not going to quote a premium because I don't have one that would hold up. Title insurers have to file their rates and policy forms before the state will give them a certificate of authority (MCL 500.7303), so the number depends on the company, and DIFS notes there can be discounts, for example when the owner's and lender's policies come from the same insurer. Ask us who customarily pays in the county you're buying in, and get it into the purchase agreement. The same goes for the winter tax proration, which we wrote about earlier this week.
Reading the commitment
The commitment is the document that comes before the policy, and I read it before I read anything else in a cottage file. DIFS says it lists the known defects, that defects the title company can't cure are generally excluded from coverage, and that you should go over it with a title professional or an attorney before closing.
Here is what I would ask. What is excluded, and why? Is the property described the same way in the legal description, the purchase agreement and the deed? Does the policy's effective date match the day you become the owner, and is the gap between closing and recording covered? And is a closing protection letter available? DIFS describes it as optional coverage for theft or misappropriation of settlement funds. One more from the same publication: don't pay the premium in cash.
Title insurance also doesn't tell you where the lot lines or the fence are, and that's a different document.
I'm a Realtor, not an attorney or an insurance agent. Your title company, your lender or a real estate attorney can tell you what your own commitment means. If you're looking at a cottage and want a second set of eyes on the paperwork, send me a note or text (231) 360-1510.
Checked against the sources linked above in October 2026.
Taylor Brown, Realtor
Taylor@taylorbrownrealtor.com
