West Virginia Mortgage Law Practice Test

Title insurance serves a specific and crucial purpose in the realm of real estate transactions. The primary function of title insurance is to protect property owners and lenders from financial losses that may arise due to defects or issues in the title of the property. These defects can include things like unresolved liens, ownership disputes, or errors in public records, which might not be discovered until after the property is purchased.

When a title insurance policy is issued, it ensures that the insured party is shielded from legal claims or financial damages resulting from these underwriting issues. This protection gives buyers and lenders peace of mind, knowing that they have financial security against potential title-related problems that could arise in the future.

In contrast, the other options do not accurately reflect the nature or scope of title insurance. For instance, title insurance is not universally required for all real estate transactions, nor does it cover any property damage, whether physical or otherwise. Additionally, title insurance is applicable to both residential and commercial properties, making it a versatile tool in real estate across different types of transactions.