Title insurance is a crucial component of any real estate transaction, offering protection to both buyers and lenders against potential issues with a property's title. Unlike other forms of insurance that protect against future events, title insurance safeguards against past events that may affect the legal ownership of the property.

Title insurance works by insuring the title to the property, ensuring that the buyer has clear ownership rights. This involves a thorough examination of public records to identify any outstanding liens, judgments, or other claims against the property. If an issue arises after the purchase, such as a previously undisclosed lien or a boundary dispute, the title insurance policy provides coverage for legal fees and other related costs.

There are two types of title insurance policies: owner's policies and lender's policies. An owner's policy protects the buyer's investment in the property, while a lender's policy protects the lender's financial interest in the property. Both policies are typically issued simultaneously during the closing process.

Title insurance is a one-time expense paid at the time of closing and provides coverage for as long as the policyholder or their heirs have an interest in the property. While it may seem like an additional cost, title insurance offers peace of mind and protection against unforeseen legal challenges that could arise from issues with the property's title.