What is the purpose of a title insurance policy?

The purpose of a title insurance policy is to provide protection against financial loss stemming from defects in the title of a property. This includes issues such as undiscovered liens, claims of ownership from outside parties, or errors in public records that could affect ownership rights. By having title insurance, homeowners are safeguarded against potential legal challenges or financial losses that could arise due to these title defects.

The other choices do not align with the fundamental function of title insurance. For instance, a title insurance policy does not cover repairs needed on the property, as that falls under home insurance or warranty policies. Additionally, while property taxes are an important consideration for real estate owners, title insurance does not play a role in ensuring these taxes are paid. Similarly, verifying market value is not a function of title insurance; rather, it is typically assessed through appraisals or market analyses and is unrelated to the protection provided by title insurance for ownership rights.