It's a question many prospective home buyers ask themselves.
Although your lender will likely require you to purchase a lender's policy, the owner's title insurance policy is optional. But, if you were thinking the lender's policy would protect you, think again. Title insurance protects against a range of issues that affect ownership of a property. If one of those issues rears its ugly head, the lender is insured for the outstanding balance of the loan. You? Without title insurance you could end up without a house or the money you put into it.
But title issues never come up.... It's true that title insurance claims are rare, but they certainly DO happen. Issues can arise from ANY of the previous owner's of your property. Consider the gentleman who passed away 40 years ago and left his house to his son. The son sold the property to a couple, who sold it to a single mom, who sold it to you. Well, now the gentleman's estranged daughter shows up with a will in which she claims her father left the property to her all those years ago! Uh oh... Without title insurance you may have to pay your own legal costs to fight the claim. If you lose in court, you may no longer own the property.
Like every insurance product, title insurance protects you from rare, unpleasant, but sometimes unavoidable circumstances. UNLIKE every insurance product, you pay for it one time and it protects you as long as you own the property. For protection that may cost less than your monthly health or auto insurance bill, it's worth the one-time premium.