What is the primary benefit of title insurance for a residential property buyer?
Correct Answer
B) It protects against financial loss due to title defects or ownership disputes
Title insurance protects the insured owner against financial loss from title problems that existed at closing but were not found, such as undisclosed liens, encroachments, survey errors, fraud or ownership disputes. The policy typically pays covered losses and the legal costs of defending or clearing the title.
Why This Is the Correct Answer
This answer states the purpose of title insurance: it compensates the insured for financial loss caused by title defects or ownership disputes that existed at closing but were not discovered, such as liens, encroachments, survey errors, fraud or forgery. Coverage typically includes the cost of defending or clearing the title as well as the covered loss itself.
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