What type of insurance protects homeowners from previous third-party claims affecting the property?

The correct answer is Owner's Title Insurance, which specifically protects homeowners from previous claims or liens that may have been placed on the property by third parties prior to the homeowner's purchase. It safeguards the homeowner against legal issues related to ownership rights, ensuring that they have clear title to the property. This type of insurance covers financial losses that may arise due to disputes over ownership, such as claims from former owners, unpaid taxes, or other encumbrances that were not discovered during the property transaction.

Homeowners insurance generally covers damage to the property itself and liabilities incurred as a result of accidents or injuries on the property, but it does not address issues related to previous ownership claims. Title insurance, while it serves a similar purpose, is a broader term that can refer to different types of title insurance policies and does not specifically denote the coverage provided to the homeowner. Liability insurance protects against claims for injuries or damage that occur on the property, rather than title issues.

Owner's Title Insurance is unique in that it provides peace of mind by ensuring that homeowners can defend their ownership against past claims that may not have been initially evident.