What does title insurance guarantee?

Title insurance primarily guarantees that the title to the property being insured is free from defects or other claims that could arise, rendering the title invalid or less than what was represented. This includes ensuring that the historical chain of title is clean and that there are no undisclosed liens, encumbrances, or other legal challenges that might affect the ownership. Additionally, title insurance typically provides a defense against legal challenges to the title, meaning that the title insurer will protect the insured party’s ownership from claims that may arise after the policy is issued.

While title insurance does not cover all potential defects in a property—such as physical issues with the property itself or certain frauds if not disclosed—it does focus on legitimacy and ownership rights. It also does not represent the full market value of the property, nor does it only provide protections for the buyer, as it is available to lenders as well. Thus, the key feature of title insurance is its assurance of good record title and the provision of a legal defense in case of disputes, which aligns with option B.