What is a key element that title insurance covers?

Title insurance is specifically designed to protect the policyholder from financial loss due to defects in the title of the property. This can include issues such as liens, encumbrances, or ownership disputes that may arise after the purchase of the property. When a title company conducts a title search, they aim to uncover any potential issues that could affect the ownership rights of the buyer. However, if something is overlooked, or if a previously unknown claim comes to light after the transaction is completed, title insurance will provide coverage for legal fees and losses incurred as a result.

In contrast, property taxes are ongoing financial obligations related to property ownership and are not covered by title insurance. Environmental hazards, while important considerations in property transactions, fall under different types of insurance such as environmental liability insurance. Market value fluctuations relate to changing economic conditions and property values but do not fall under the purview of title insurance, which focuses solely on the validity and integrity of ownership rights.