What is “title insurance”?

Title insurance is a specialized form of insurance that protects property owners and lenders from financial losses due to defects or issues with a property's title. This includes problems that may arise from liens, undisclosed heirs, fraud, or incorrect the property records. When purchasing real estate, a title search is conducted to identify any potential issues with the title. However, not all problems can be uncovered during this search, and title insurance provides coverage against any claims that may arise after the purchase.

In contrast, the other options do not pertain to title insurance. Insurance that covers fire damage focuses on the physical structure of the property, while insurance that covers the physical property itself generally refers to homeowners or property insurance that protects against direct damage to the building and its contents. Liability insurance addresses claims against the homeowner or property owner for accidents or injuries that occur on the property, which is entirely separate from the concept of title warranties and protections. Therefore, title insurance specifically addresses the legal ownership and rights associated with real estate, which distinguishes it from other types of insurance related to property.