Title insurance protects against issues like undiscovered liens, errors in public records, forged documents, or competing ownership claims. Unlike most insurance, it's a one-time premium paid at closing covering past events.

Two policies are typically issued: a lender's policy (required, covers the lender's interest) and an owner's policy (optional but recommended, covers the buyer's equity).

Costs vary by state and home value — typically 0.5%-1% of the purchase price. The buyer often pays in most states, the seller in others.