Title insurance

Title insurance protects against problems in a property's chain of ownership that a records search did not catch: an old lien that was never released, a forged signature on a past deed, an undisclosed heir with a claim, or an error in the public records. Unlike most insurance, it is paid once at closing and covers the past rather than the future — it defends the ownership you thought you were buying.

There are two flavors. A lender's policy protects the lender's covered interest, while an owner's policy protects the buyer's covered interest, subject to the policy's terms, exclusions, and limits. Whether either policy is required, optional, or customarily paid by a particular party depends on the transaction, lender, location, and contract, so compare the actual commitment and policy rather than relying on a general rule.

A one-time-premium policy that protects against defects in a property's ownership history, like unknown liens or ownership claims.