A buyer purchases a policy that protects against financial loss from covered defects in the property’s title. That policy is title insurance. Unlike most insurance, it guards against past events rather than future ones.

Owner’s policies protect the buyer’s equity; lender’s policies protect the mortgagee’s interest. Covered risks typically include forgery, undisclosed heirs, recording errors, and certain liens that were missed in the search. Exclusions and exceptions are listed in the policy.

A one-time premium is paid at closing. The policy remains in effect as long as the insured or the insured’s heirs hold the property. Claims are relatively uncommon, yet when they occur the insurance can prevent catastrophic loss. Title insurance is a standard requirement of most mortgage lenders.

It is the safety net beneath the public records system.