What is the purpose of title insurance?

What is the purpose of title insurance?

• A. To protect buyers from defective titles
• B. To cover real estate agent commissions
• C. To insure property against fire damage
• D. To guarantee home inspection services

Answer: (A)

The purpose of title insurance is to protect buyers from defective titles. When purchasing real estate, a title search is conducted to identify any potential issues, such as liens, encumbrances, or disputes related to the property's ownership history. Title insurance provides coverage against any legal claims that may arise from these issues, ensuring that the buyer's rights to the property are secure. It serves as a safeguard against financial losses that could come from defects in the title that were not discovered during the title search. This type of insurance is typically a one-time premium paid at closing and provides peace of mind to buyers regarding their investment in real estate. The other options do not align with the primary functions of title insurance. Commission coverage, property damage, and home inspection services are unrelated to title issues, which is why they do not serve the same protective purpose as title insurance does.

The purpose of title insurance is to protect buyers from defective titles. When purchasing real estate, a title search is conducted to identify any potential issues, such as liens, encumbrances, or disputes related to the property's ownership history. Title insurance provides coverage against any legal claims that may arise from these issues, ensuring that the buyer's rights to the property are secure. It serves as a safeguard against financial losses that could come from defects in the title that were not discovered during the title search. This type of insurance is typically a one-time premium paid at closing and provides peace of mind to buyers regarding their investment in real estate.

The other options do not align with the primary functions of title insurance. Commission coverage, property damage, and home inspection services are unrelated to title issues, which is why they do not serve the same protective purpose as title insurance does.