Which statement best describes title insurance?

• A. Refers to an insured statement of title
• B. Provides protection for mortgage lenders and owners
• C. Serves as the means of evidence that the owner has lawful ownership
• D. Is unrelated to property transfers

Answer: (B)

Title insurance is an insurance policy that protects against losses from defects in a property's title that a standard title search might miss. There are two common forms: one for the lender (protecting the loan during the mortgage) and one for the owner (protecting the owner’s equity). Because lenders typically require coverage and owners can purchase it to safeguard their interest, title insurance provides protection for mortgage lenders and owners. It isn’t a statement of title or proof of ownership—that role belongs to the deed or title certificate—and it is connected to transfers because it helps insure the title as part of the financing and transfer process.