What does a title insurance policy protect against?

A title insurance policy primarily protects against liens and claims against the property that may arise from previous owners or unresolved issues related to the title. This includes various legal encumbrances, such as mortgages, unpaid taxes, assessments, or judgments that could be claimed against the property. The policy ensures that the buyer is shielded from these potential financial burdens that could affect their ownership rights.

The importance of this protection stems from the fact that issues may not always be apparent at the time of purchase. Title insurance conducts a thorough examination of public records to identify any existing liens or claims, providing peace of mind to the buyer that they have clear title ownership. In the event that a claim arises after the purchase, the title insurance company will often cover legal costs and resolve the claim so that the property owner does not bear the financial burden.

While natural disasters and future liens are significant concerns in property ownership, title insurance specifically addresses past claims and existing liens, distinguishing it from other forms of insurance. Similarly, theft, while a concern, is not relevant to what title insurance covers; the focus is substantially on the integrity of the title itself rather than on misappropriation or criminal acts concerning the physical property.