What is the primary purpose of title insurance?

What is the primary purpose of title insurance?

• A. To provide property owners with market analysis
• B. To protect against financial loss from title defects or claims
• C. To assist in property management
• D. To guarantee appreciation in property value

Answer: (B)

The primary purpose of title insurance is to protect against financial loss from title defects or claims. This type of insurance serves as a safeguard for property buyers and lenders, ensuring that the title to the property is clear and free of encumbrances that could affect ownership rights. Title defects can arise from various sources, including past ownership disputes, undisclosed liens, or erroneous recordings in public records. If a claim is made against the title after the property purchase, title insurance can help cover the legal costs and any financial losses associated with resolving such claims. In contrast, providing market analysis is not within the scope of title insurance, as this function is typically associated with real estate appraisals and market research. Assisting in property management is unrelated to title insurance capabilities, as property management pertains to the operation and oversight of rental properties rather than the legal and ownership aspects of property titles. Lastly, guaranteeing appreciation in property value is not a feature of title insurance; real estate values can fluctuate based on various market conditions that are independent of title issues.

The primary purpose of title insurance is to protect against financial loss from title defects or claims. This type of insurance serves as a safeguard for property buyers and lenders, ensuring that the title to the property is clear and free of encumbrances that could affect ownership rights. Title defects can arise from various sources, including past ownership disputes, undisclosed liens, or erroneous recordings in public records. If a claim is made against the title after the property purchase, title insurance can help cover the legal costs and any financial losses associated with resolving such claims.

In contrast, providing market analysis is not within the scope of title insurance, as this function is typically associated with real estate appraisals and market research. Assisting in property management is unrelated to title insurance capabilities, as property management pertains to the operation and oversight of rental properties rather than the legal and ownership aspects of property titles. Lastly, guaranteeing appreciation in property value is not a feature of title insurance; real estate values can fluctuate based on various market conditions that are independent of title issues.