A policy of title insurance is a contract of reimbursement between the insuring institution and insured, protecting the insured against losses because of any damage by reason of defects, encumbrances or liens of the insured title existing at the date of the policy.

The policy is signed after a complete examination of the public records and shows the condition of the record title, including any money obligations outstanding against the property, easements and other matters which may affect the rights of ownership and use of the insured property.

Title insurance protects the "record" title, insuring it is good subject only to the exceptions expressly set out in the policy. It insures against certain matters which do not appear of record, such as forgery, identity of parties, incompetence of former owners, interest of missing heirs, and status of individuals not having the right to sell this property.

There are several types of policies. Owners’ policies are issued to real estate owners. Purchasers’ policies are issued to purchasers of real estate under contract. Mortgage policies are issued to mortgage companies.