What is the primary purpose of title insurance?

The primary purpose of title insurance is to protect against financial loss due to title defects. This type of insurance safeguards the policyholder, usually the buyer or lender, from issues related to property ownership, such as claims against the property, liens, or other legal encumbrances that may arise after the purchase. Title insurance ensures that the purchaser has a secure and unencumbered title to the property, protecting their financial investment.

In real estate transactions, having this protection is crucial because undiscovered issues can lead to significant financial losses. For example, if a previous owner had outstanding debts against the property or if there were clerical errors in public records regarding ownership, the new owner might find themselves facing legal battles or having to pay for those debts. Title insurance provides peace of mind, knowing that if such issues arise, the insurance company will cover the losses up to the policy amount.

The remaining choices do not directly address the core function of title insurance. Ongoing maintenance of a property involves different aspects of property management and upkeep that title insurance does not cover. While title insurance may facilitate smoother real estate transactions by assuring parties of clear title, its main role is indeed protection against title defects, rather than simply facilitating transactions or comparing property values.