What is the main function of title insurance?

The primary function of title insurance is to protect against losses that may arise due to defects in the title to real property. When a property is sold, an extensive examination of the title is conducted to identify any potential issues that could affect ownership, such as outstanding liens, improper transfers, or claims of ownership from third parties. However, even with a thorough examination, some issues may not be uncovered, leading to disputes over property ownership or claims that could result in financial loss for the buyer.

Title insurance provides coverage for these unforeseen risks, ensuring that the policyholder is protected against potential legal fees, court costs, and any financial loss resulting from the title defects. This peace of mind is crucial for buyers, as it secures their investment in the property by minimizing the risk that a title problem will arise after the transaction is complete.

The other choices do not align with the principal role of title insurance. Guaranteeing mortgage payments pertains to mortgage insurance, property damage coverage relates to homeowner’s insurance, and ensuring homeowners have valid insurance does not concern title issues or ownership rights.