A few years back my mother-in-laws house was for sold, before it was sold it had to go through a title search, there was an issue with a past mortgage document that was not complete or I think the paperwork was not filled out correctly. It took the search folks a few extra couple weeks to get this resolved so she could sell the house. 


Title insurance is insurance against loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens.  The title insurance company will  help to protect an owner's or lender's financial interest in purchasing real property against loss due to title defects, liens or other matters. Title Insurance will defend you against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy.  This is what insurance is about.


Typically your real property interests are insured  fee simple ownership or a mortgage. However title insurance  can be purchased to insure any interest in real property, including an easement, lease or life estate. Just as lenders require fire insurance, car theft insurance and other types of insurance coverage to protect the property investment, nearly all institutional lenders will also require title insurance to protect their interest in the collateral of loans secured by real estate.

Title insurance differs in several respects from other types of insurance. Where most insurance is a contract where the insurer indemnifies or guarantees another party against a possible specific type of loss (such as an accident or death) at a future date, title insurance generally insures against losses caused by title problems that have their source in past events. This often results in the curing of title defects or the elimination of adverse interests from the title before a transaction takes place.  Most title companies attempt to achieve this by searching public records to develop and document the chain of title and to detect known claims against or defects in the title to the subject property. If liens are found, the insurer may require that steps be taken to eliminate them (for example, obtaining a release of an old mortgage or deed of trust that has been paid off, or requiring the payoff) before issuing the title policy.

The paper work got corrected and the house loan closed.

This is why you have insurance to protect yourself from things beyond your control.


Cheers