What does a closing title insurance policy typically cover?

A closing title insurance policy is designed primarily to protect the insured party against losses arising from title defects that may exist prior to the issuance of the policy. This can include issues such as liens, encroachments, or claims of ownership that might affect the property's title.

The purpose of the policy is to offer assurance that the title to the property is clear and that the insured can enjoy their ownership without fear of future claims that might arise from problems that occurred before the policy was issued. If a title defect is found after the purchase, the title insurance helps cover the legal costs and any losses incurred, thus providing significant protection for the property owner or lender.

In contrast, the other options do not accurately reflect the focus of a closing title insurance policy. While a title policy does protect the interests of the buyer, it does so in a way that encompasses more than just that; it covers potential defects that could affect the property's title. It does not cover all potential future claims or the outcomes of property inspections, which are separate considerations in a real estate transaction.