What is title insurance?

What is title insurance?

• A. Insurance protecting against title defects found in public records.
• B. Insurance protecting against title defects not found in public records, typically required by lenders.
• C. Insurance that guarantees mortgage payoff.
• D. Insurance that protects against tenant disputes.

Answer: (B)

Title insurance protects you from losses caused by defects in the property's title that aren't found by a typical search of public records. Even a thorough title search can miss issues such as forged documents, undisclosed heirs, errors in recorded deeds, or liens that weren’t revealed in public records. A title insurance policy covers these hidden defects up to the policy amount, providing legal defense and compensation if the title cannot be insured. Lenders usually require this coverage to protect their security interest in the property, which is why a loan title insurance policy is commonly part of closing. The protection is typically a one‑time premium paid at closing. It doesn’t insure mortgage payoff, nor does it cover ordinary tenant disputes.

Title insurance protects you from losses caused by defects in the property's title that aren't found by a typical search of public records. Even a thorough title search can miss issues such as forged documents, undisclosed heirs, errors in recorded deeds, or liens that weren’t revealed in public records. A title insurance policy covers these hidden defects up to the policy amount, providing legal defense and compensation if the title cannot be insured.

Lenders usually require this coverage to protect their security interest in the property, which is why a loan title insurance policy is commonly part of closing. The protection is typically a one‑time premium paid at closing. It doesn’t insure mortgage payoff, nor does it cover ordinary tenant disputes.