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 New York State, title insurance is a form of indemnity insurance that protects the holder from financial loss due to defects in a title to a property. The New York Department of Financial Services regulates the title insurance industry, setting standards and practices for issuing policies. Title insurance policies cover the policyholder for any legal defense costs and losses up to the amount of the policy if a claim against the property's title is made. It is typically purchased by the buyer of the property, but it can also be acquired by the seller to protect the buyer. The title insurance company will conduct a title search to uncover any issues with the title such as liens, encumbrances, or defects before issuing a policy. In New York, the cost of title insurance is regulated, and premium rates must be filed with the state. The one-time premium is paid at the closing of the real estate transaction.