Title insurance protects real estate purchasers and mortgage lenders against historical claims, encumbrances, liens, or ownership defects that existed prior to the purchase date.
Unlike standard auto or health insurance (which protects against *future* accidents), title insurance protects against *past* undiscovered legal defects on the property's chain of title.
Two separate policies exist: 1. Lender’s Title Insurance: Mandatory policy paid by the borrower that protects the mortgage lender up to the outstanding loan amount. 2. Owner’s Title Insurance: Optional (but strongly recommended) one-time policy that protects the buyer's home equity against unrecorded liens, forged deeds, undisclosed heirs, or boundary dispute claims for as long as they or their heirs own the home.