Title Insurance
Title insurance insures title to a specific piece of property at a specific point in time. Unlike casualty insurance, which insures against possible future events, title insurance generally insures against loss or damage resulting from past events. The goal of title insurers is to provide insureds with notice of those past events, disclose those events as exceptions to coverage, and thereby avoid the assumption of future risk through elimination of risk by disclosure of those events that would otherwise trigger coverage under the title insurance policy.
A policy of title insurance is a contact of indemnity. It does not guarantee or represent that the title is in any particular state or condition. As such, it does not guarantee or represent that someone may assert a right or interest in title to the real property. Rather, a title insurance policy indemnifies the insured against actual loss compensable under the terms of the policy arising from a matter for which coverage is afforded in accordance with, and subject to, the terms and conditions of the title insurance policy.
Title companies issue both owner's and lender's policies of title insurance. The principal difference between the two is that the owner's policy insures that the named insured has title to the property, whereas the lender's policy insures the indebtedness secured by the real property. Practically, this means that a lender suffers a loss compensable under its policy after it forecloses upon the property and a defect in title or any other covered risk prevents it from recovering the amount of the insured indebtedness.
- Steven J. Kahn - Burnham Brown
Nathan J. Jones - First American Title Insurance Company
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