Title Insurance

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DEFINITION of 'Title Insurance'

Insurance that covers the loss of an interest in a property due to legal defects and that is required if the property is under mortgage. Most title insurance is lender's title insurance, which is paid for by the borrower but protects only the lender.

Owner's title insurance is a separate policy; in some areas it is paid for by the seller to protect the buyer's equity in the property.

INVESTOPEDIA EXPLAINS 'Title Insurance'

While a lender's policy only protects the lender against loss, the fact that the policy was issued reflects that a title search has taken place, which can give some assurance to the buyer. However, title searches are not 100% infallible, hence the need for insurance.

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