Title insurance protects against the risk of the buyer’s ownership being subject to the claims of another. A few examples of such claims are: outstanding liens against the property; delinquent property taxes from prior to closing; forged deed or release instruments; incorrect property description in the deed. If a claim is brought against an owner over an insured risk, the owner must immediately notify the title insurance company. The title company will step in and defend against the claim, and/or if the claim is legitimate and the owner suffers an insured loss, the title company must indemnify the owner against the loss.
Should I buy title insurance?
Buyers should always purchase title insurance. Although percentage chances of having title issue are slim, the costs of dealing with such an issue far outweigh the one-time premium charged for title insurance.