What type of insurance protects against a lender's loss resulting from title defects that should have been cleared beforehand?

Lender's Title Insurance is specifically designed to protect the lender from potential losses arising from defects in the title that were not discovered prior to the closing of a mortgage loan. This type of insurance covers issues such as liens, unpaid taxes, or legal judgments that may affect the ownership of the property and that the lender would not have been aware of at the time of the transaction.

The lender's title insurance policy is issued for the amount of the loan and remains in effect until the loan is paid off or refinanced. This ensures that if any claims arise regarding the title's legitimacy that could impact the lender's investment, the insurance will protect them against financial losses.

In contrast, owner's title insurance protects the property owner against similar title defects but is separate from the lender's coverage. Mortgage insurance, on the other hand, protects lenders in case of borrower default and does not relate to title issues. Home warranty insurance typically covers repairs to major home systems and appliances and also does not address title concerns.

Thus, the selection of Lender's Title Insurance is appropriate for safeguarding against potential losses from title defects that may occur after the mortgage process is completed.