What does title insurance protect against?

Title insurance specifically protects against losses that may arise from defects in the title or ownership disputes. This type of insurance is crucial for both buyers and lenders to ensure that the title to the property being purchased is clear and free from any liens, claims, or other legal issues that could affect ownership. When someone purchases a property, they want to ensure that they have the rightful ownership and that no one else has a valid claim to the property. Title insurance guards against these risks, providing financial protection should any title issues arise after the purchase.

In contrast, losses due to natural disasters, increases in property taxes, or fluctuating mortgage interest rates are not covered by title insurance. Natural disasters fall under property insurance, while tax increases relate to local government policies, and interest rate fluctuations are a matter of financial markets rather than title validity. Understanding these distinctions is important when considering the scope of title insurance and its role in real estate transactions.