Title insurance is coverage purchased by buyers of real estate to protect against issues of title. In a real estate transaction, a title company or another institution will conduct a title search for any erroneous issues with the title, and if there are none, they provide insurance to cover any issues they may have missed for different reasons such as a forged title. The insurance and the title search generally are paid by the buyer of the property at one time as part of the closing costs. If the buyer is using a loan to cover the cost of the sale, the lender generally requires the buyer to pay for a title search and insurance in the name of the lender. Often, litigation arises with title insurance similarly to other insurance litigation like whether a particular title defect was covered or regarding the amount of coverage. It is important to ensure when buying real estate that the company or person hired to conduct the title search be credible and thorough, and one should have an insurance policy that covers the value of the property that could be affected by a title defect.
[Last updated in November of 2021 by the Wex Definitions Team]