What does "title insurance" protect against?

Title insurance is designed to protect against legal claims on property ownership. When a property is purchased, there may be hidden issues in the history of the title that could result in legal disputes. These issues can include previous liens, disputes over ownership, or claims that other parties have rights to the property. Title insurance provides financial protection in the event that these claims arise after the purchase, safeguarding the buyer from losses related to these issues.

In contrast, the other options focus on different areas of property risks. Environmental issues generally fall under separate insurance policies such as environmental liability insurance or homeowners' insurance, rather than title insurance. Property tax increases are typically a matter of local governing bodies and financing rather than ownership rights. Homeowner's personal liability pertains to accidents or injuries that occur on the property, which is generally covered by homeowners' insurance, not title insurance. Thus, title insurance specifically relates to protecting ownership rights and title integrity.