Imagine purchasing a piece of property that is not what it claimed to be. Such is the stuff of nightmares, which is why lenders insist on title insurance. Although other types of insurance may insure against future events, title insurance covers claims based on past events that have created a defect in land title caused by public-record errors, forgeries, incorrect marital statements, and the like. For a one-time premium, property owners can expect title coverage that extends for the length of their property ownership. This is a pretty good deal for homeowners who want to sleep at night as well as lenders who want to ensure that the mortgages they are providing go toward valid transactions.
HINT: Virtually every real estate transaction depends on title insurance.