What is title insurance in real estate transactions, and when is it typically considered?

• A. Insurance that protects against personal belongings; usually required by lenders for all properties.
• B. Insurance that protects against property damage; always optional.
• C. Insurance that protects against title defects; typically obtained if a title search reveals issues or to expedite closing; sometimes recommended or required by lenders.
• D. Insurance that guarantees rent collection; required for tenants.

Answer: (C)

Title insurance protects against problems with the property's title that could threaten your ownership or a lender’s security. It covers defects in the chain of ownership, unresolved liens, forged documents, missing heirs, or recording errors that might not be revealed by a standard title search and could surface after closing. It is typically considered after a title search is done and issues are identified, or to provide certainty and speed up closing. Lenders often require a lender’s title insurance policy to protect their loan, and buyers may opt for an owner’s policy for their own protection, though it’s not always mandatory. The policy is usually a one-time premium paid at closing and lasts as long as you own the property; it does not cover property damage, wear and tear, or future non-title problems.