Why are two kinds of policies sometimes needed on a single property?

If a buyer pays cash for a property, only owner's title insurance is needed. In cases where money is borrowed to purchase the property, the mortgage policy protects the lender's loan by insuring a valid lien in case the mortgage is foreclosed. This protection enables the mortgage lender to sell the mortgage to other types of investors, such as insurance companies, which in turn act to bring in "new" money from other parts of the country for use in local mortgage lending.

So the seller pays to insure clear title on the sales price and the buyer pays for title based on the mortgage amount.

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