What is the primary purpose of title insurance?

The primary purpose of title insurance is to protect against financial loss that can arise due to title defects. When a property is bought or refinanced, the title insurance policy ensures that the ownership interest is clear and free from any obligations or issues that could affect the buyer's rights. Title defects can include unresolved liens, ownership disputes, or errors in public records, which could potentially lead to financial repercussions if claims arise.

The insurance provides a safety net; if any problems related to the title are discovered that were not revealed during the title search, the insurance will cover the costs related to resolving those issues. This protection is critical for buyers and lenders, as it secures their investment in the property. By offering this layer of security, title insurance plays an essential role in real estate transactions, ensuring that buyers have the confidence to proceed with their purchases.