What is the purpose of title insurance?

Title insurance serves a crucial role in real estate transactions by providing protection against potential losses arising from defects in the title of a property. This type of insurance ensures that the buyer has clear ownership rights and safeguards against issues that may not be uncovered during the title search process, such as outstanding liens, forged documents, or undisclosed heirs who could claim ownership of the property.

By obtaining title insurance, the insured party can feel secure knowing that if any legal challenges to their ownership arise due to these defects after the purchase, the title insurance policy will cover the associated costs, including legal fees and potential financial losses. This ultimately facilitates confidence in real estate transactions and promotes stability in property ownership.

Other choices mention aspects such as property taxes, natural disasters, and theft, which do not align with the primary function of title insurance, emphasizing why option B is the only appropriate answer in this context.