Deeds & Title

Title Insurance

Insurance that protects against financial loss from defects in a property's title that existed before the policy was issued.


Definition

Title insurance protects owners and lenders against losses from title defects — forged documents, undisclosed heirs, errors in records, or previous liens not discovered during the title search. Unlike other insurance that covers future events, title insurance covers past events. There are two types: owner's policy (protects the buyer) and lender's policy (protects the lender). A one-time premium is paid at closing.

Exam Tip

Title insurance covers PAST defects, not future ones. Distinguish it from hazard insurance (which covers future damage).

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