What is the purpose of title insurance?

The purpose of title insurance is to protect against losses due to title defects. This type of insurance provides coverage for potential issues related to the ownership of the property, such as undiscovered liens, claims of ownership by others, or errors in public records that could affect the buyer's legal right to the property. Title insurance ensures that if a claim arises after the sale, the policyholder will be defended against the claim and compensated for any financial loss associated with it.

In real estate transactions, title insurance is crucial because it helps to provide peace of mind to buyers and lenders that the title is clear, allowing them to avoid costly disputes over property ownership in the future. Unlike other types of insurance that cover physical damage or repair costs, title insurance focuses specifically on the legal and ownership aspects of property, ensuring that the buyer receives a clear title upon purchasing.