What does a title insurance policy typically cover?

A title insurance policy primarily provides protection for owners and lenders from any loss related to defects in the title that were not discovered prior to the purchase of the property. This includes issues such as unpaid taxes, liens, claims of ownership, or other encumbrances that may arise that were not evident during the closing process. The policy safeguards the insured party against financial losses associated with these title defects, ensuring that if a claim arises due to an undiscovered issue, the title insurer will compensate for the loss incurred.

The other options present scenarios that are not covered by a standard title insurance policy. For example, a policy does not cover all property defects without exception, as only specific title issues are included. Moreover, claims made by prior owners refer specifically to events that have legally passed, which are not typically the focus of title insurance coverage. Lastly, natural disasters fall under different types of insurance policies, such as homeowner’s or property insurance, rather than title insurance, which focuses solely on the title's integrity and legal standing. Therefore, the accurate depiction of coverage attributes of a title insurance policy is represented in the chosen answer.