Title insurance protects you from actions taken before you purchased a piece of real property. There is no amount of attention or action that can protect from mistakes made in the past.
Title insurance cannot eliminate title defects, any more than fire insurance can eliminate fire. Although should your title fail, you will be reimbursed for your losses up to the face amount of the policy, plus legal costs.
When you buy real estate, there are many possible complications when it comes to ownership and permitted actions. When you buy most personal property you do not need to know the legal history of the former owner. You may buy stocks or bonds without caring whether the seller has a tax bill due. You may buy a car without worrying about whether there are any judgments against the owner.
Without title insurance, you become a self-insurer. You are responsible for the mortgage, and any legal costs you may incur. You may have recourse against others, but collection often proves difficult.
Title insurance is as important as fire insurance. Losses from title defects can be greater than fire losses. If a house burns, the land is still there to rebuild. If title to the property fails, you may have nothing. The most thorough and competent title examination cannot protect against loss from hidden title defects.
See our list of many, but not all, of the Title Defects insured against by a title insurance policy. Some other defects are specifically not covered by the policy.