Real Estate has always been considered one of a person’s most valuable assets. Therefore, laws and regulations have become complex and cumbersome. A “Title Insurance Policy” insures the owners of real property or others interested against financial loss caused by title risks that are covered. It is extremely important that the buyer be financially protected against any undisclosed restrictions, liens or other types of claims against the property. A title company provides this information for its underwriter by examining public records and issuing a commitment as to the current condition of the title. The Texas Department of Insurance regulates the issuance of owner’s and lender’s title policies. It is the intent of the Department to provide for the protection of every Texas consumer and purchaser of a title insurance policy. The premium rate and types of coverages are set by the Texas Department of Insurance and is not a negotiable cost. This one-time premium charge for title insurance provides protection against hidden defects (undiscoverable problems), which may not be discovered by a search and examination of public records. Title Insurance is valuable assurance that every possible potential obstacle to “clear” title has been brought to the buyer’s attention. The lender’s policy protects the lender’s interest only and does not provide protection to the owner. What are some of the hidden defects? Hidden defects can include fraud, forgeries, duress, defective documents, improper signatures, faulty acknowledgements, recording errors, incompetence, incapacity, impersonation, unknown heirs and incorrect tax reports. Remember, your title policy is insurance. It is a contract of indemnity, meaning a promise to pay you or to take other action if you have a loss resulting from a covered title risk.