The purpose of title insurance is to insure for unknown defects. Unknown defects can include forgeries, fraud, improper court proceedings, missing heirs, recording mistakes, and numerous other potential title defects that could be difficult or impossible to uncover during an extensive title search. As such, title insurance guarantees the policy holder (i.e. the owner or the lender who holds a mortgage on property) marketable title. In other words, if you have title insurance, you are insured that your property can be conveyed to another without defects or encumbrances.
In addition, title insurance protects the policy holder from claims against the properties from others. For example, if a neighbor claims he owns part of your property and decides to sue you to that effect, your title policy will pay to defend that claim up to the amount of your policy.
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