Which statement best describes title insurance protection?

Which statement best describes title insurance protection?

• A. It protects from financial loss due to defects on title to real property and from unenforceability of mortgage liens or other liens
• B. It covers physical damage to the property from hazards
• C. It insures against flood damage
• D. It provides tax assessment protection

Answer: (A)

Title insurance protects against financial loss arising from defects in the title to real property and from liens that could affect ownership or the lender’s security interest. Even with a careful title search, issues like forged signatures, undisclosed heirs, clerical errors in public records, or undisclosed liens can surface after closing. A title policy either defends the title in court or pays valid claims up to the policy amount, preserving the owner’s or lender’s rights. This protection is distinct from coverage for physical damage to the property or hazards; those are addressed by homeowners or hazard-specific insurance (like flood insurance). It also doesn’t cover tax assessments, which are handled separately.

Title insurance protects against financial loss arising from defects in the title to real property and from liens that could affect ownership or the lender’s security interest. Even with a careful title search, issues like forged signatures, undisclosed heirs, clerical errors in public records, or undisclosed liens can surface after closing. A title policy either defends the title in court or pays valid claims up to the policy amount, preserving the owner’s or lender’s rights. This protection is distinct from coverage for physical damage to the property or hazards; those are addressed by homeowners or hazard-specific insurance (like flood insurance). It also doesn’t cover tax assessments, which are handled separately.