PSI Property Ownership Practice Exam

Question: 1 / 400

Which statement is true about title insurance?

It ensures the property’s value increases over time

It protects against future encumbrances on the property

Title insurance is designed to protect property owners and lenders from potential ownership disputes and other claims against the title. The accuracy of the title at the time of purchase is the primary concern, as title insurance provides coverage against losses resulting from defects or issues that were not discovered during the initial title search.

The protection it offers pertains specifically to unknown or undisclosed encumbrances that could arise after the policy is issued, such as liens that were not detected before the purchase. It does not financially guarantee an increase in property value, nor does it cover physical damage to the property itself or limited coverage to solely commercial properties. Instead, it serves a broader function, providing a level of security for both residential and commercial transactions related to the ownership of real estate.

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It is only necessary for commercial properties

It covers damage to the property itself

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