This section is from the book "Practical Real Estate Methods For Broker, Operator & Owner", by Thirty Experts. Also available from Amazon: Practical Real Estate Methods for Broker, Operator, Owner.
First, it guarantees that the title is marketable. The marketability of the title is its most important attribute, implying as it does that the title is one which a purchaser can be compelled by the courts to take. An owner having a policy insuring that his title is marketable knows that he can compel any person who contracts to take the title to fulfill his contract or, if the courts relieve him, the title company will stand the loss.
Second, the policy states and guarantees the exact condition of the title, and at a glance the owner is informed as to the liens on his property or any objections to the title.
Third, the policy is an engagement to pay the cost of any litigation affecting the property.
Fourth, the policy guarantees that if the assured sells the property with warranties, he shall suffer no damage by reason of any defects in the title, for which he would otherwise be liable on these warranties.
The amount in which the company* will reimburse the assured for loss is limited to the amount stated in the policy. The policy is not assignable and protects only the assured. One reason for this is that only a single premium is exacted. There are no annual premiums on title policies.