What does title insurance specifically protect against?

Title insurance specifically protects against losses arising from title defects and liens. This type of insurance is designed to ensure that the property title is clear of any issues that could affect ownership rights. These issues might include outstanding liens against the property, such as mortgages or tax liens, as well as errors in public records, unknown heirs claiming ownership, or other claims that could challenge the buyer’s legal ownership of the property.

When purchasing a property, buyers are at risk of inheriting these issues, which might not be immediately evident through a title search. Title insurance provides peace of mind by covering the legal fees and expenses associated with resolving these disputes if they occur, thus safeguarding the buyer’s investment.

In contrast, the other options relate to areas that title insurance does not cover. Homeowner disputes often concern property boundaries or neighbor issues, market fluctuations pertain to changes in property value that can impact resale, and natural disasters involve physical damage to the property, which is generally covered by other forms of insurance, such as homeowners insurance, rather than title insurance.