What does a title insurance policy protect against?

A title insurance policy protects against deficiencies in the title during the time of transfer. This is essential because a title insurance policy ensures that the buyer receives clear and marketable title to the property, meaning there are no undisclosed liens, claims, or encumbrances that could affect ownership rights. It provides coverage for legal costs and damages that may arise if someone challenges the title or if past errors or issues come to light after the purchase.

While issues related to the physical structure of the property, future increases in property value, and property tax assessments are significant concerns in real estate transactions, they do not fall under the purview of title insurance. Title insurance specifically focuses on the legitimacy of ownership and any historical title issues, thereby offering financial protection and peace of mind to property buyers and lenders.