What is the function of a title insurance policy?

The function of a title insurance policy is to protect against defects in the title. This means that it serves as a safeguard for property owners and lenders against losses that may arise from issues such as undisclosed liens, ownership disputes, or other encumbrances that could affect their right to the property. When a title company conducts a title search, they investigate the history of the property title to identify any potential problems. However, unforeseen issues can still surface after closing, and title insurance provides financial protection against these types of risks. This is a critical aspect of real estate transactions because it helps ensure that the buyer has clear ownership and can take full advantage of their property, free from legal entanglements that could hinder their ownership rights.