Escrow & Title
A Missouri title insurer discovers a defect in title after issuing a policy. The insurer is obligated to:
ACancel the policy
BDefend the policyholder's title or pay the policy limits✓ Correct
CRefund only the premium
DTransfer the claim to the county
Explanation
Title insurance obligates the insurer to defend the insured's title against covered claims and to pay losses up to the policy amount if the title defect cannot be cured.
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Key Terms to Know
Title Insurance
Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
EncumbranceAny claim, lien, charge, or liability attached to real property that affects its value or limits its use.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Math Concepts
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