In title insurance, what type of loss is typically excluded from coverage?

In title insurance, losses that are explicitly mentioned in the exclusions of the policy are typically not covered. Title insurance is designed to protect property owners and lenders against defects in the title to real estate, such as fraud, liens, or claims that could affect ownership. However, the policy will clearly outline specific exclusions that denote circumstances under which coverage does not apply.

For instance, losses resulting from certain types of governmental actions, public policy issues, or pre-existing defects might be excluded, meaning these risks are not covered by the insurer. This specificity helps both insurers and policyholders understand the boundaries of what the insurance will protect against, ensuring that all parties are aware of potential vulnerabilities.

Understanding these exclusions is crucial for a buyer or lender to make informed decisions about title insurance coverage. It also emphasizes the importance of thoroughly reviewing the title insurance policy to understand what is included and what is specifically left out.