What does title insurance indemnify a policy holder against?

• A. Losses due to personal injury on the property
• B. Title defects not disclosed during the transaction
• C. Monetary loss caused by an encumbrance on title
• D. Legal fees for dispute resolution

Answer: (D)

Title insurance primarily protects policyholders against specific risks associated with the ownership of real property. The correct answer reflects one of the core purposes of title insurance. It indemnifies the policyholder against losses arising from title defects that were not known at the time the property was purchased. This can include issues such as undisclosed liens, claims of ownership by others, or other title irregularities that could affect the transfer and ownership rights of the property.

Title insurance does not cover personal injury claims, which are typically addressed through liability insurance. Similarly, while it could be argued that it may offer protection against certain encumbrances directly affecting ownership, it does not primarily provide monetary loss coverage related to general encumbrances. Legal fees for dispute resolution are typically not covered by title insurance, as the focus of this insurance is ensuring that the title to the property is clear of defects.

Thus, the answer highlights that title insurance's fundamental purpose is to protect against defects and issues related to the title itself, which is crucial for a property owner to understand when engaging in real estate transactions.