What does the term "title insurance" typically protect against?

The term "title insurance" is primarily designed to protect property owners and lenders from losses that may arise due to defects in the title of real property. This includes issues such as disputes over property ownership, liens, encumbrances, or other legal claims that may not have been identified during the title search prior to closing.

When a buyer purchases property, title insurance provides reassurance that the title is clear and that they will not face unexpected legal challenges regarding ownership. If a title defect is discovered after purchase, the title insurance company will typically cover the costs associated with resolving these defects, thereby safeguarding the financial investment of the insured party.

The other choices, while they pertain to real estate in some way, do not relate to the specific purpose of title insurance. Natural disasters, for instance, are covered by different types of policies such as hazard insurance, while market fluctuations affect property value but are not mitigated by title insurance. Similarly, debt from mortgages pertains to loan obligations and financing rather than the legal ownership of the property itself.