American Land Title Association (ALTA) Practice Exam 2025 – Your Comprehensive All-in-One Guide to Success!

Title insurance primarily covers the risk of losses related to fraudulent signatures and undisclosed heirs. This is because the main purpose of title insurance is to protect the policyholder from defects in title that have occurred in the past and were not discovered during the title examination process. These defects can include issues such as forged documents, errors in public records, or claims from parties who were not disclosed at the time of the transaction, such as heirs who may have a legal claim to the property.

Title insurance helps ensure that the buyer or lender is safeguarded against potential financial losses that could arise from these issues. By providing coverage for these specific risks, title insurance plays a crucial role in facilitating real estate transactions, giving buyers and lenders peace of mind regarding the ownership and legality of the title they are acquiring.

Other options focus on different aspects of real estate risks or related costs. For instance, while property line disputes and legal fees are important considerations in the realm of real estate, they do not directly fall under the primary coverage of title insurance. Market fluctuations, on the other hand, are economic risks that affect property values over time but do not relate to the title of the property itself, which is why they are not included in the coverage provided by title insurance.