What happens if a defect is found after title insurance has been issued?

When a defect in the title is discovered after title insurance has been issued, the insurance company often has an obligation to cover losses incurred due to that defect. This is a fundamental function of title insurance, which is designed to protect property owners and lenders from various claims against the title that could arise. Title insurance provides financial security by compensating the insured party for losses relating to defects, liens, or encumbrances that may not have been discovered during the title search prior to the issuance of the policy.

Title insurance typically covers issues such as unpaid taxes, undisclosed heirs, fraud, or other irregularities that could affect property ownership rights. When a valid claim arises, the insurer will investigate the defect and, if covered under the policy, will provide compensation up to the policy limits. This coverage can alleviate the financial burden on the property owner, allowing them to resolve the issue without bearing the full cost themselves.

The other options, while presenting various scenarios, do not align with the foundational principles of how title insurance is intended to operate. Owners would not be left without assistance, the title cannot be arbitrarily revoked by the insurance company, and the company does take action when defects are found. Thus, protecting the insured against potential title defects is a primary