What type of insurance is provided under the lender’s policy?

The lender's policy specifically provides title insurance for the lender. This type of insurance protects the lender from any claims or legal issues that may arise regarding the ownership of the property after the transaction has closed. The policy ensures that the title to the property is clear and free from liens or encumbrances that could affect the lender's security interest in the property.

Title insurance is distinctly different from other forms of insurance. For instance, homeowner's insurance covers damages to the property itself due to various events like fire or theft, while general liability insurance protects against claims resulting from accidents that cause injury or damage to someone else's property. Property insurance similarly insures the physical property against loss or damage.

In the context of real estate transactions, the lender's policy is crucial because it reassures the lender that their investment is protected, thereby allowing them to provide financing to the borrower with greater confidence. This focus on the lender's interest is what makes the lender's title insurance distinct and vital within the realm of property financing.