Title defect coverage
Title defect coverage is what a title insurance policy actually pays for.
It is narrower than people assume in one direction and broader in another, and both differences matter.
What is covered#
Defects existing at the policy date that were not found by the search and not listed as exceptions.
Forgery in the chain. Undisclosed heirs with an inherited interest nobody knew about. Marital interests never disclosed, where a spouse's signature was required. Indexing errors, where a recorded document was filed against the wrong name or parcel and is effectively invisible to a search. Capacity problems — a personal representative without letters, an officer without authority. Defects in decades-old conveyances never previously noticed.
Each is a real defect in the record or behind it, and none is findable by a careful search.
The duty to defend#
Frequently worth more than the loss coverage, and the part buyers overlook.
The insurer defends the title against a covered claim.
A quiet title action over an undisclosed heir costs real money before anyone establishes who is right. Legal fees accrue whether the claim ultimately succeeds or fails, and the policy funds that defence.
For an owner facing a claim they will probably win, the defence obligation is the benefit that actually arrives.
What is not covered#
Anything arising after the policy date. A judgment lien recorded next year, an easement granted afterwards, a boundary problem created by something the owner does.
The exceptions. The matters the search found and the parties accepted — easements, restrictive covenants, survey matters where no survey was obtained, and the standard exceptions the insurer applies generally.
Reading Schedule B is how you learn what the policy will not pay for, and it is the part of a title commitment most reliably skimmed.
Removing exceptions widens the coverage#
Some standard exceptions can be removed by supplying a survey and a seller's affidavit.
That is a normal request, it costs little, and it converts an excluded risk into a covered one. On rural property or anything with visible boundary features that do not match the description, it is worth doing.
Where it earns its cost#
Distressed property, consistently.
Foreclosure, probate and tax-forfeited purchases convey by instruments that warrant almost nothing — a sheriff's certificate, a personal representative's deed, a state deed, a limited warranty deed. Each conveys by authority rather than by ownership.
And the chains on long-neglected property are the ones most likely to contain the gaps this coverage exists for.
The weaker the deed and the messier the history, the more the owner's policy is carrying — which is exactly why declining it on those purchases is the wrong economy.