Title insurance is protection against loss arising from problems connected to the title to your property. Before you purchased your home, it may have gone through several ownership changes, and the land on which it stands went through many more. There may be a weak link at any point in that chain that could emerge to cause trouble. For example, someone along the way may have forged a signature in transferring title. Or there may be unpaid real estate taxes or other liens. Title insurance covers the insured party for any claims and legal fees that arise out of such problems. If you are obtaining a loan from a lender on your home/property purchase, most lenders require title insurance and it lasts until the loan is repaid, however it is paid by you as a single payment made upfront.
This insurance protects the lender up to the amount of the loan of the mortgage, but it doesn’t protect your equity. For that, you need an owner’s title policy for the full value of the home. Title insurance protects you “back in time” not forward in time — as other insurance policies typically cover. That is because this is protecting you against anything that was done previous to you purchasing the home that was unbeknownst to you. There are often many bizarre cases where property was bought fraudulently and a developer developed homes on the property and then once the fraud is found out, all of the homeowners become liable. Title insurance is typically one of the lowest costs of purchasing a home, so it is extremely wise to pay for and have this insurance. You never know when you might have to utilize its coverage!