Escrow & TitleIntermediateNorth Carolina Exam

In NC, 'title insurance' differs from other types of insurance in that it:

ACovers future risks and events

BCovers past events (pre-existing title defects) that were unknown at the time of the policyCorrect

CIs paid in monthly installments

DIs required only for commercial properties, though outcomes can differ depending on circumstances

Why Covers past events (pre-existing title defects) that were unknown at the time of the policy Is Correct

Answer B: Covers past events (pre-existing title defects) that were unknown at the time of the policy

Title insurance is unique in that it insures against losses from defects or claims that existed before the policy date but were unknown at the time — rather than future events like property or health insurance.

Exam Tip: Escrow & Title

Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.