Which type of insurance policy is directly related to protecting against defects in the title of real estate?

The correct response is title insurance, as this type of insurance specifically addresses the risks associated with defects in the title of real estate properties. Title insurance protects buyers and lenders from financial loss due to issues like liens, encumbrances, or ownership disputes that may not be discovered until after the purchase has been finalized.

The primary function of title insurance is to ensure that the title to a property is legitimate and free of any legal claims or issues that could affect ownership. This is crucial in real estate transactions, as it provides a safeguard for both parties involved—ensuring that the buyer has clear rights to the property and that the lender’s investment is also secured.

Other types of insurance, such as life insurance or health insurance, do not cover issues related to property ownership and are designed to address entirely different risks related to health and personal circumstances. Similarly, property insurance focuses on protecting the physical structure and contents of a property from specific perils like fire or theft, but it does not extend to the critical evaluation and protection against title defects. Therefore, title insurance stands out as the essential type of policy that directly meets the need for safeguarding against title-related challenges in real estate transactions.