Title insurance is an insurance policy that covers you if title problems come up after you buy or refinance a property. The possible complications that cannot be discovered through even the most thorough title search, include lost, forged or incorrectly filed deeds.
For example, if an unknown heir makes a claim on the property you just bought, you may be held responsible for it. Without title insurance, you might have to pay the legal costs to settle a dispute. So, if you lose a dispute, it could cost you money, the equity you have in your home and perhaps even the ownership. Title insurance is designed to cover the associated legal costs to settle the dispute and/or to resolve the problems.
A title insurance policy is used to protect yourself from the risks or undiscovered interests. Once purchased, the title insurance remains in effect for as long as you own your property. Title insurance adds security and peace of mind to home ownership.
There are two principal forms of title insurance: they are: