The purpose of the title insurance is to ensure your rights and interests to the property, and those of your lender, are completely protected. Title insurance companies issue two types of title policies. An Owner’s Policy which covers the homeowner and a Lender’s Policy which covers the lending institution. If the loan is for a purchase transaction, both types of policies are issued at the time of closing. If the loan is a refinance, you already have an owner’s policy that was issued when you purchased the property, so then only a lender’s policy will be issued.
If any claim covered under your policy is ever filed against your property, the title company will pay the legal fees involved in the defense of your rights. The title company is also responsible to cover losses arising from a valid claim. This protection will remain in effect as long as you or your heirs own the property.