Title insurance is one of the most misunderstood parts of a real estate closing — unlike homeowners insurance, it protects against problems with the property's ownership history that existed before you bought it, not damage that happens after.
What a title defect actually looks like
Common issues include undisclosed liens, forged signatures in a prior deed, unresolved estate claims from a previous owner, or boundary and easement disputes that surface after closing — all things a title search is meant to catch, but occasionally misses.
Owner's policy vs. lender's policy
A lender's title policy protects the mortgage company's interest and is typically required to close a loan. An owner's policy, which is optional in some states, protects the buyer's own equity — skipping it to save money is a common regret if a title issue surfaces later.
It's a one-time premium, not ongoing coverage
Unlike most insurance, title insurance is paid once at closing and covers the policyholder for as long as they (or their heirs) hold an interest in the property — there's no annual renewal or premium to keep it in force.
What it doesn't cover
Title insurance doesn't cover physical property defects, zoning issues that arise after purchase, or problems disclosed and excluded in the policy itself — reading the exceptions section of a title commitment before closing is worth the time it takes.