Title insurance protects property owners and lenders against loss due to property ownership disputes and a fault in the title that is not found in a search of public records.
Furthermore, title insurance defends property owners from the complainant is not registered in the insurance policy, including the disabled in public records such as forged documents, undisclosed heirs, an error in the legal description of the property, and other errors.
Companies offering title insurance does not cure the defects, but guarantees against loss due to title defects other than those specifically excluded. It requires a title company to go to court, if necessary, and to defend the policyholder against any claim of ownership of the land.
There are two types of title insurance. The first is called the mortgagee policy, or the policy of the lender, to protect the company's interests in the property mortgage. The policy is the lender for the loan amount at the time the claim is paid.
The second type is the before mentioned title insurance policy owners. The owner’s title insurance policy fee is published on behalf of the property owner. This may be paid by the buyer or the seller as indicated in the sales contract.
Before issuing title insurance, the title company will do a title search on the property. As a result, the abstract of title is made which is a chronological history summed up the title to the property, a list of all documents affecting title record.