Title insurance insures, defends, indemnifies, and protects the policyholder against claims or losses arising from a defect or claim against the title to real property. Title insurance is usually issued to the buyer of real property by the title company that conducted the title search.
In Texas, title insurance is regulated by the Texas Department of Insurance (TDI), and it serves to protect policyholders against financial loss from defects in title to real property. When a property is bought or refinanced, a title company will conduct a title search to ensure that the seller has a valid claim to the property and that there are no liens, encumbrances, or legal issues that could affect the buyer's ownership rights. If a title defect is found after the purchase, the title insurance policy will cover the insured for any valid claims made against the property, as well as the legal costs to defend against such claims. Title insurance premiums in Texas are set by the TDI, and all title insurance companies must charge the same rate for a policy, which is a one-time fee paid at the closing of the transaction. Unlike other types of insurance that protect against future events, title insurance is retrospective, covering events that occurred before the policy's issuance.
