If you're buying a home, you will eventually have to discuss title insurance with your bank, but a little effort on your part can make a difference in what you have to pay for protection.

There are two types of title insurance: Lenders title insurance, also called a Loan Policy, and Owner's title insurance. The Loan Policy is usually based on the dollar amount of your loan and protects the lender's interests in the property against a problem with the title. The policy coverage decreases each year and disappears as the loan is paid off.

Owner's title insurance, in the amount of the real estate purchase, is purchased for a one-time fee at closing and lasts as long as you or your heirs have an interest in the property. Owner's title insurance fully protects the buyer should a problem arise with the title that was not uncovered during the title search, and pays for any legal fees involved in defending a claim to your title.

Unlike other forms of insurance that focus on possible future events and charge an annual premium, the American Land Title Association (ALTA) explains that title insurance is a safeguard against loss arising from hazards and defects already existing in the title.

Claims on title insurance are rare compared to other types of insurance, with the title industry paying claims equal to about 5.4 percent of operating income compared with more than 80 percent for property and casualty insurers, according to ALTA's figures.

Common types of title insurance claims are for the cost of back property taxes that the title company missed in researching a sale, or the cost of a settlement with a neighbor whose new driveway or fence crept across a property line.

A consumer who wants to share in the lender's peace of mind can get title insurance as well when his home loan is closed — for several hundred dollars more. The second policy would cover you, who, without it, wouldn't be protected at all from a title problem. Generally, only the policy protecting the lender is required. Protection for the home buyer is optional.

Construction of a new home raises special title problems for both the lender and owner. You may think you are the first owner when constructing a home on a purchased lot, however, it is likely there were prior owners of the unimproved land. A title search will uncover any existing liens and a survey will determine the boundaries of the property being purchased. If the builder fails to pay subcontractors and suppliers, title insurance covers the new owner against any lien on the property.

Not all lenders require title insurance on second mortgages, but many who focus on a higher-risk market — large second-mortgage loans or loans turned down by banks but accepted at higher rates by finance companies — do require title insurance. It should cost slightly less than the title coverage on a large first mortgage — perhaps 0.3 or 0.4 percent.

What's a savvy shopper to do?

There's not a lot you can do to avoid the expense of a title policy when you're buying a home, but here are some ideas to lower your cost:

• Ask the seller to pay for your coverage. That's actually a requirement in some states and something that can be negotiated in others.

• Find out whether you can get the current title policy already on the house reissued to you by the title insurer or the lawyer doing the new title search. That can save hundreds of dollars, since it will mean a less-involved search if the policy isn't too old. You probably won't be told if that can be done, so be sure to ask.

• If you buy your own policy in addition to the lender's policy, check your title policy for exceptions that may leave you with less protection than you want. If any exceptions are a concern, ask the title insurer if they can be taken off the policy.