Which statement best describes the purpose of a title insurance policy?

• A. To Insure Against Defects in Title
• B. To Insure Against Property Value Fluctuations
• C. To Insure Against Structural Damage
• D. To Insure Against Boundary Disputes

Answer: (C)

The main concept is what title insurance protects against: defects in the title that could affect ownership. A title insurance policy guards the insured from financial loss due to problems with the title itself—things like forged or fraudulent documents, undisclosed liens, errors in public records, misindexed conveyances, or unknown heirs. These issues are latent problems that could surface after purchase and threaten ownership, so the policy provides protection for that risk.

It does not insure against changes in property value, nor against structural damage to the property, and boundary disputes aren’t the primary purpose of title insurance. Some boundary issues can create a cloud on title and may be covered if they affect the title, but the core purpose is to insure the title itself, not the property's physical condition or market value.