What is the purpose of title insurance?

The purpose of title insurance is primarily to protect against losses arising from disputes over property ownership. When a property is bought, there may be hidden issues related to the title that are not apparent at the time of purchase, such as unpaid taxes, undisclosed liens, or disputes regarding ownership rights. Title insurance provides coverage for these potential issues, ensuring that if a problem arises that affects the ownership of the real estate, the insurance company will cover the financial losses to the policyholder.

The other options relate to different aspects of real estate ownership or financial obligations. Ensuring a property is free of liens is part of the title search process but not the purpose of title insurance itself. Coverage for home renovations pertains to construction or property improvement, which is unrelated to title issues. Making sure the mortgage is paid off is a separate concern regarding loan obligations and does not directly relate to the function of title insurance.