What does title insurance protect against?

Title insurance plays a vital role in real estate transactions by protecting homeowners and lenders from any potential defects in the title of a property. This includes any claims, liens, or disputes that might arise regarding ownership rights after a property is purchased. When someone purchases title insurance, they receive a guarantee that their ownership rights to the property are secure and that the title is free from any unforeseen claims or encumbrances.

Defects can include various issues, such as a previous owner's unpaid debts resulting in liens against the property, or claims from heirs who might contest ownership based on prior wills. Title insurance covers the insured party against financial losses that might arise from these complications, thus providing peace of mind during the home-buying process.

Other options like losses from market fluctuations, unpaid property taxes, and homeowner liability claims do not fall under the purview of title insurance. Market fluctuations refer to the changing values of properties, which are not insurable risks covered by title insurance. Unpaid property taxes are a separate obligation of the property owner and would typically need to be addressed directly. Similarly, homeowner liability claims pertain to legal responsibilities for injuries or damages occurring on the property and do not relate to title security.