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Reviewed by Casa Academy and updated July 29, 2026 using the current DBPR checklist and Pearson VUE scheduling guidance.

Title Insurance

Title insurance is an indemnity policy that protects lenders and owners against covered losses from defects in title, liens, or encumbrances discovered after closing, with a one-time premium paid at settlement and coverage lasting for the policy period.

Exam context

Title insurance indemnifies against covered title defects after closing. One-time premium at settlement. Lender policy protects mortgage; owner policy protects equity. Not the same as hazard insurance.

Policy types and coverage

Lender policies protect the mortgage amount and decrease as the loan is paid down. Owner policies protect the buyer equity and optional increased coverage amounts. Coverage is retrospective, defending against claims from past events such as forged deeds, undisclosed heirs, or recording errors. Standard exceptions may exclude matters shown in the survey or known to the insured.

Closing role

Title companies or attorneys conduct the search, issue a commitment listing requirements, and record documents after closing. Premiums are regulated in many states. RESPA allows shopping for title services on the LE/CD disclosures. Agents should explain that title insurance differs from hazard insurance, which covers future physical damage.

Examples

  • Undisclosed lien

    After closing, a contractor lien from the prior owner surfaces. The owner title policy defends the claim and pays covered losses up to policy limits if the lien is valid and not excepted.

  • Lender requirement

    A bank requires a lender title policy for $320,000 before funding. The buyer may optionally purchase an owner policy at a simultaneous-issue discount.

Keep studying

Practice title insurance questionsEnroll in pre-licensing

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