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Despite the diligent efforts of conveyancers, abstracters, attorneys, and title companies to give as accurate a picture of land ownership as possible, there is no guarantee that the finished abstract/RPA is completely accurate. Title insurance protects against losses arising from title defects or errors in examination. The title insurance policy that a borrower pays for at closing protects the lender; however, borrowers have the option to purchase an owner's policy to protect their interest. Some examples of title defects: a recorded deed in the title chain that is a forgery; a married person represented themselves on a deed as a single person; a deed was executed by a minor or a legally incompetent person; undisclosed heirs; misfiling of a document, etc. The basic principle of title insurance is similar to any form of insurance: many persons pay a small amount into an insurance pool that is then available if any one of them should suffer a loss.
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