What is an exception to title insurance coverage?

The correct choice relates to defects that are apparent during a title search, which are typically not covered by title insurance. Title insurance is designed to protect against unknown issues and defects that could arise after the policy is issued. If a defect is visible and easily identifiable during the title search, it is considered a known issue. Consequently, title insurance would not cover these known defects, as the buyer or the title agency had the opportunity to discover them before the property transaction was finalized.

This principle reinforces the importance of conducting a thorough title search prior to purchasing property. By identifying and addressing any existing defects upfront, buyers can avoid future complications that might arise from these issues, knowing that title insurance only covers matters that are not apparent or disclosed during the search process. Thus, future claims, errors made by the title agency, or fraudulent acts could potentially be covered by title insurance, but clear defects identified during the initial search will not be.