What is the primary purpose of a title insurance policy?

The primary purpose of a title insurance policy is to protect against title defects. This type of insurance is designed to safeguard the policyholder from financial loss that may arise due to issues related to the title of a property. These issues can include unknown liens, claims by other parties, errors in public records, or any other discrepancies that could affect rightful ownership.

When a title insurance policy is issued, a thorough examination of public records is conducted to identify any potential problems with the title. If any defects are later discovered that were not identified during this examination, the title insurance company is responsible for covering the financial losses incurred by the policyholder.

While the other options, such as guaranteeing property value, securing mortgage loans, or validating property ownership, are related to aspects of real estate transactions, they do not address the specific and critical protective function that title insurance serves in managing risks associated with title claims and defects. Hence, the focus on protecting against title defects is what distinctly characterizes the function and importance of a title insurance policy.