American Land Title Association (ALTA) Practice Exam

Remove ads, get exclusive features. Starting from $7.99

Question: 1 / 400

In the case of a title defect, what does title insurance provide?

No protection to the insured

A pathway to dispute property tax liabilities

Compensation for loss due to the defect

Title insurance provides compensation for loss due to a title defect. This insurance is designed to protect property owners and lenders from financial losses that arise when a title issue is discovered after the purchase of a property. Such defects can include liens, encumbrances, errors in public records, or even issues related to previous owners that were not discovered during the title search.

When a title defect is present, the title insurance company typically investigates the claim and may provide compensation for the financial loss that results from the defect. This ensures that the insured parties have some level of financial security and protection against issues that could affect their ownership rights.

The other choices do not align with the primary function of title insurance. While title insurance does not inherently provide access to free legal representation or specific pathways to address property tax liabilities, its main role is to address title defects and compensate for any related losses.

American Land Title Association (ALTA) Practice Exam

Get the latest from Examzify