Which statement is TRUE regarding insurance coverage under the ALTA 2006 policy?

The ALTA 2006 policy provides title insurance coverage that is designed to protect against losses arising from defects, liens, or encumbrances on the title that were not revealed during the title search process at the time of closing. The coverage under this policy continues as long as certain conditions are met, primarily that the insured retains an interest in the property or is liable to pay off a mortgage.

For example, if the insured sells the property but agrees to remain liable for a mortgage on the property, the title insurance may still offer coverage for issues that arise related to that mortgage, such as claims from other parties. Thus, the policy does not just terminate upon the sale of the property if there are ongoing interests or obligations related to the title.

This continuity of coverage reflects the intent of the policy to ensure that insured parties are protected from potential title defects even after the property has changed hands, as long as they continue to meet the stipulated conditions of the policy. Therefore, it's crucial for policyholders to understand the scope and duration of their coverage in relation to their ownership or financial interests in the property.