What is the primary function of title insurance?

The primary function of title insurance is to protect against title issues, both known and unknown. This type of insurance safeguards property owners and lenders from potential disputes or claims related to the ownership of the property. When a property is purchased, there may be existing liens, encumbrances, or other title defects that are not immediately apparent. Title insurance provides coverage for these risks, ensuring that the policyholder is protected against any financial loss resulting from claims that may arise after the purchase.

Unlike other types of insurance, such as homeowners' insurance which covers physical damage to the property, title insurance focuses specifically on the legality of ownership. It plays a crucial role in the real estate transaction process, allowing buyers and lenders to have confidence that the title to the property is clear and that they are protected against any future claims that could challenge their ownership.