Kovats Real Estate School Practice Test 2025 – 400 Free Practice Questions to Pass the Exam

Title insurance is a specific type of insurance designed to protect property owners and lenders from financial loss due to defects in the title of the property. These defects could include issues such as unknown liens, disputes over property ownership, or errors in recording. When someone purchases title insurance, they pay a one-time premium at closing, and the policy typically covers legal fees and potential financial losses that arise if a title defect is discovered after the purchase is finalized.

This makes title insurance particularly important in real estate transactions, as it ensures that the buyer has clear ownership of the property without unforeseen claims that could undermine that ownership. Ensuring a clean title before closing is crucial, and title insurance serves as a safeguard against any issues that might arise later.

Other types of insurance mentioned, such as coverage for rental properties, protection against natural disasters, or policies covering homeowners' personal belongings, do not relate directly to the title of a property, which is the focus of title insurance. These are distinct areas of coverage that address different aspects of property ownership or tenancy.