What is the basis for recovery by an insured in a title insurance claim?

The basis for recovery by an insured in a title insurance claim is proof of loss sustained. This means that the insured must demonstrate evidence of the actual financial loss they experienced due to a title defect covered by the policy. Title insurance protects property owners and lenders against defects in titles that could affect ownership or the property's value, such as undisclosed liens or claims. If a claim is made, the insured must provide documentation or other forms of proof to show that a specific loss occurred as a direct result of such defects.

Other options may not fully capture the requirement for recovery. Legal action against the insurer, while potentially necessary in some circumstances, is not a foundational requirement on its own for recovering losses. Similarly, the market value of the property or the existence of unresolved disputes are factors that might be considered in assessing a situation, but they do not serve as the primary basis for recovery. It's the documented proof of the actual losses tied to insured risks that is critical for a successful claim.