An owner’s or lender’s title policy indemnifies against loss from covered title defects. Claims proceed under the policy’s own procedures.
Notice. Prompt written notice is required, and the policy generally provides that the insurer is prejudiced-and-discharged only to the extent prejudice is shown. Notify early anyway; delay complicates everything.
The duty to defend. The insurer must provide a defence against claims alleging a covered matter, and its duty to defend is broader than its duty to indemnify. It selects counsel in most policies.
Options for the insurer. Pay the claim, pay the policy limit, negotiate a settlement, cure the defect by obtaining a release or curative instrument, or litigate to establish title. Insurers frequently cure, which is the outcome most useful to an owner.
Measure of loss. Generally the lesser of the diminution in value caused by the defect and the policy amount, with the value fixed at the policy date unless an inflation or increased value endorsement applies.
Exclusions. Matters created or agreed to by the insured; matters known to the insured and not disclosed; governmental regulation including zoning, absent an endorsement; eminent domain; and defects arising after the policy date.
Coordination with a survey. Many disputes turn on whether the standard survey exception was removed, which is decided long before the claim.