Which statement about title insurance is true?

Which statement about title insurance is true?

• A. Title insurance protects against title defects; lender's policy ensures lender's lien priority; owner's policy protects buyer's equity.
• B. Title insurance cannot guarantee there will never be any future title issues.
• C. A title policy covers damages from fire.
• D. A title policy requires annual renewal to remain in force.

Answer: (A)

Title insurance protects you from problems with the property's title that could affect ownership or the lender’s security. It comes in two policies: a lender’s title policy, which protects the lender’s lien position and priority, and an owner’s title policy, which protects the buyer’s equity in the property. The statement that best fits what title insurance does is that it guards against title defects and distinguishes the roles of the two policies—one protecting the lender’s interests and the other protecting the owner's equity. It’s also helpful to keep in mind that title insurance does not guarantee there will never be future title issues; new problems can arise after closing from fraud or undiscovered heirs. And, unlike casualty or homeowners insurance, a title policy is typically a one‑time premium rather than something that requires annual renewal.

Title insurance protects you from problems with the property's title that could affect ownership or the lender’s security. It comes in two policies: a lender’s title policy, which protects the lender’s lien position and priority, and an owner’s title policy, which protects the buyer’s equity in the property. The statement that best fits what title insurance does is that it guards against title defects and distinguishes the roles of the two policies—one protecting the lender’s interests and the other protecting the owner's equity.

It’s also helpful to keep in mind that title insurance does not guarantee there will never be future title issues; new problems can arise after closing from fraud or undiscovered heirs. And, unlike casualty or homeowners insurance, a title policy is typically a one‑time premium rather than something that requires annual renewal.