What does the term "title insurance" cover?

The term "title insurance" specifically provides protection against loss resulting from defects in the title and issues that may not have been discovered at the time of purchase. This includes problems such as outstanding liens, encroachments, or other legal claims that could affect the ownership or use of the property. Title insurance ensures that the buyer's ownership rights are secure and offers financial protection should any title issues arise after the transaction has been completed.

This type of insurance is crucial in real estate transactions because it mitigates the risk of financial loss that can occur if a claim is made against the property’s title. Buyers are highly encouraged to carry title insurance to safeguard their investment in the property.

Other options, such as protection against market fluctuations or coverage for physical damage, do not align with the core purpose of title insurance. These aspects are typically addressed through different types of insurance policies, such as homeowners' insurance or market risk considerations in real estate investment strategies. Furthermore, while personal belongings insurance is related to homeowners' insurance, it is not covered under title insurance.