What does the term "title insurance" provide protection against?

Title insurance provides protection against losses due to defects in the title of a property. When a property is purchased, title insurance ensures that the title is clear of any liens, encumbrances, or other issues that could affect ownership rights. This coverage protects the policyholder from financial loss if a defect is discovered after the purchase, such as a previously undisclosed lien, claims of ownership by others, or errors in the public records.

It is crucial in real estate transactions because title problems can arise unexpectedly, and title insurance offers peace of mind to both buyers and lenders. The protection offered by title insurance is specific to issues related to the title and does not extend to other aspects of property ownership, such as physical damage, liability claims, or changes in market value, which are addressed through other forms of insurance or coverage.