Escrow & Title
A Massachusetts title insurer discovers a defect in the title after issuing a policy. The insurer must:
ARefuse to pay because the defect existed at the time of issuing the policy
BDefend the insured against claims arising from the defect and compensate for covered losses✓ Correct
CCancel the policy and refund the premium
DSue the prior owner for the defect
Explanation
Title insurance covers title defects that existed (but were unknown) at the time the policy was issued. The insurer must defend the insured against covered claims and pay covered losses up to the policy amount.
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