What is a requirement for a title insurance policy to be valid?

For a title insurance policy to be valid, it is essential that the insured holds ownership of the property. This requirement is fundamental because title insurance provides coverage against potential defects or issues related to the title of the property that the insured owns. If an individual does not hold ownership, they would not have a vested interest in the property and consequently would not require protection from title defects.

Ownership is what creates the need for title insurance; it ensures that the person purchasing the policy has something to protect. This coverage typically includes protection against claims from third parties, issues related to undisclosed liens, or errors in the public record. If the insured has no legal claim over the property, the title insurance policy would hold no relevance or purpose, as there would be no potential financial risk associated with title defects for that individual. Thus, ownership is a crucial aspect in the establishment of a valid title insurance policy.