Extended coverage title insurance is designed to protect property owners and lenders from a broader range of potential issues related to real estate ownership. This type of insurance covers claims that may be on record, such as liens or encumbrances, as well as those that are off record, which may not be as evident at the time of purchase. For instance, extended coverage can provide protection against issues like forgery, undisclosed heirs, or other defects that may not show up in a title search but could still affect ownership rights.
In contrast, standard title insurance generally covers only those issues that are recorded, and does not provide the same level of protection for off-record claims. A general warranty deed is a type of deed that conveys property with certain guarantees about the title but does not offer insurance against future claims. Basic homeowner’s insurance primarily covers physical damage to the property and liability but does not address title issues. Thus, extended coverage title insurance stands out because it encompasses both on-record and off-record claims, offering a more comprehensive safeguard for buyers and lenders in real estate transactions.