What is "title insurance"?

Title insurance is specifically designed to protect property owners and lenders against loss due to defects in the title of real property. This type of insurance is crucial because it ensures that the owner has the legal right to the property, and it covers issues such as undisclosed liens, false impersonation, or errors in public records that could affect ownership rights. When purchasing real estate, a title search is conducted to identify any issues, but unforeseen problems may still arise after closing. Title insurance acts as a safeguard, covering legal fees and any financial loss incurred due to these title defects.

The other options relate to different forms of insurance or warranties which do not pertain to title risks. For example, policies ensuring property value or covering damage from natural disasters do not address ownership rights or title integrity. Additionally, a warranty guaranteeing property maintenance is unrelated to title security, as it focuses on ongoing care rather than ownership verification. Thus, choosing title insurance as the correct answer reflects a clear understanding of its purpose in the real estate context.