Escrow & Title
A 'policy of title insurance' in Illinois covers the insured against which of the following risks?
AFuture changes in zoning that reduce property value
BPhysical damage to the property from fire or flood
CLosses arising from title defects that existed before the policy's effective date✓ Correct
DThe borrower's default on the mortgage
Explanation
Title insurance covers the insured (owner or lender) against losses arising from title defects that existed prior to the policy's effective date — such as undiscovered liens, forgeries, errors in the public record, and competing claims. It does not cover future events, physical property damage, or mortgage default.
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