Title insurance in the United States is indemnity insurance that protects against financial loss due to defects in title to real property and from the invalidity or unenforceability of mortgage liens.

Title insurance is defined by s. 624.608, F.S., as “insurance of owners of real property or others having an interest in real property or contractual interest derived therefrom, or liens or encumbrances on real property, against loss by encumbrance, or defective titles, or invalidity, or adverse claim to title.” Title insurance is a policy issued by a title insurer that, after performing a search of the title, represents the state of that title and insures the accuracy of its search against claims of title defects.

Title insurance is usually taken out by the purchaser of property or an entity that is loaning money on a mortgage. Purchasers of real property and lenders utilize title insurance to protect themselves against claims by others that claim to be the rightful owner of the property. Most lenders require title insurance when they underwrite loans for real property. Title insurance provides a duty to defend related to an adverse claim against the title, and also promises to indemnify the policyholder for damage to the lender’s security interest created by a cloud on the title, unmarketable title, or adverse title that was not discovered by the title insurer.

In most states, the title insurer charges a premium for title insurance that includes the charge for performance of primary title services by a title insurer or title insurance agent or agency, and incurring the risks incident to such policy. The title insurer must receive at least 30% of the premium to cover the risks and insure insurer solvency.

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