What is a primary function of a title insurance policy?

The primary function of a title insurance policy is to indemnify for title defects. This means that the policy protects the insured party, typically the property owner or lender, against losses incurred from issues relating to the title of the property that may arise after the purchase. These issues might include undisclosed liens, ownership disputes, or errors in the public records that affect the ownership or legitimacy of the title.

When a title defect is uncovered after the policy has been issued, the insurer will cover the financial losses, including legal fees if it becomes necessary to defend the title. This indemnification process provides crucial peace of mind for buyers and lenders, making it a core service of title insurance.

Other options, while related to aspects of real estate transactions, do not encompass the fundamental purpose of title insurance. For instance, legal representation is typically provided by attorneys, not title insurance policies. Protection against liens can be part of what title insurance addresses but does not encompass the full scope of coverage. Ensuring property rental agreements falls outside the realm of title insurance, as it pertains to rental law and agreements rather than ownership and title integrity. Thus, the primary role of a title insurance policy is centered around addressing and indemnifying against title defects.