"On its face, title insurance seems like a fair deal. For around $1,000, a policy protects you for the life of your mortgage against the possibility that the person who sold you your home was not the full and rightful owner."
A lender's title insurance policy does the above and is issued in favor of the lender. The owner's title insurance policy is issued to the owner and protects his title to the property for as long as he owns it. Furthermore, in my state, title insurance premiums are usually based on the higher policy coverage amount (owner or lender), and the title agent should issue a title policy to the party with the lower coverage amount for a $50.00 simultaneous issue fee. What happens in most residential closings is that the title attorney will issue both policies at the full book premiums for each, and tack on the $50.00 simultaneous issue fee too. It isn't illegal, but they are overcharging home buyers for title fees.
What state are you in?