How does a title insurance policy protect property owners?

A title insurance policy serves as a crucial protection mechanism for property owners by addressing potential risks associated with the ownership of real estate. Specifically, it safeguards against financial loss that may arise from defects in the title to the property or any claims that could challenge ownership rights. These defects could stem from issues such as outstanding liens, errors in public records, fraud, or previous ownership disputes.

When a title insurance policy is purchased, it conducts a thorough examination of the property's title history to identify any possible issues beforehand. If a claim is made against the title after the purchase, the title insurance will cover the legal costs to defend against the claim and compensate for losses if the claim is valid.

This foundational purpose of title insurance is what makes it essential for property owners, as it provides peace of mind and financial protection that cannot be guaranteed by policies addressing property renovations, property taxes, or assurances of increasing property value.