In order to get an understanding of the need for title insurance we should probably begin with how the public records are searched by title companies. Title searches point of origin is the US patent (the point when the land was originally claimed) . Title searches begin with the most recent deed, and searching the current title holders name (grantee) backwards in time, until the deed when the grantee acquired the property is located. That grantor’s name is then searched backwards in time in the grantee’s book to find when the grantor acquired title as a grantee. This process continues, and over time, the property description involves larger and larger parcels of land. Eventually, the searcher finds the U. S. Patent.
The primary purpose for you the buyer to have title insurance is to make sure that you have free & clear title to the property you are buying. Free & clear title simply stated means that any and all liens or encumbrances prior to you purchasing your property have been cleared at closing. If anything comes up that was missed you have title insurance in place to protect your investment in what in most cases is your largest asset.