What does the term "title insurance" primarily refer to?

The term "title insurance" primarily refers to insurance that protects against defects in property title. This type of insurance is crucial in real estate transactions because it ensures that the buyer has a clear, unencumbered ownership of the property. Title insurance provides coverage for issues that may arise from past events affecting the title, such as liens, undisclosed heirs, or fraud, ensuring that the new owner is not held responsible for any claims against the property that existed before their ownership.

This insurance is different from property damage insurance, which focuses solely on damage to the structure or land itself, and it is not related to personal liability issues related to real estate transactions. Additionally, it does not cover home contents and appliances, making it specifically tailored to issues surrounding ownership and title integrity rather than physical property or personal items.