What is title insurance and how does it differ from a title guarantee?

• A. Title insurance protects against title defects not found in a title search; it is issued for a specific term/owner or lender and does not guarantee title.
• B. Title guarantee guarantees the title against all defects and is issued for life of ownership.
• C. Title guarantee covers only the cost of title search, not defects.
• D. Title insurance is a government-backed guarantee of transfer.

Answer: (A)

Title insurance shifts the risk of hidden title problems to an insurer. When you obtain a title insurance policy, you pay a one-time premium at closing and receive protection against losses from title defects that a standard title search did not uncover. The coverage applies to specific parties—the owner or the lender—and the policy is valid for a defined term or for the lender’s loan amount, depending on the type of policy. Importantly, it does not guarantee that the title is perfect; it guarantees protection against covered defects up to the policy limits.

This differs from a title guarantee, which is a promise that the title is free of defects for the entire ownership period. Such a guarantee is not the same as an insurance product and is not government-backed or tied to a specific term in the same way.