Why might a homeowner obtain title insurance?

A homeowner might obtain title insurance primarily to protect against potential financial loss from title defects. Title insurance serves as a safeguard against issues that could threaten the owner's legal right to the property. These issues may include undisclosed liens, improper property descriptions, or fraud related to the ownership history of the property.

When a property is purchased, there is often a complex history of ownership that may not be fully transparent. Title insurance helps to ensure that the homeowner is the rightful owner and that there are no unexpected claims or encumbrances on the property. If a claim arises after purchase, the title insurance would cover the legal costs involved in defending against such claims and compensate the homeowner for any potential financial losses incurred from them.

In contrast, while satisfying lender requirements can be a factor in obtaining title insurance, it is not the primary purpose of it. Title insurance does not directly contribute to increasing the resale value of a home or cover property maintenance costs, as those concerns fall outside the parameters of title protection.