ALTA Practice Exam – Complete Prep Resource

A title insurance policy typically remains in effect for as long as the insured party or their heirs have an interest in the property. This means that if the insured sells the property, the policy typically ceases to protect the new owner, but the insured and their heirs continue to be covered against claims that may have arisen during the time they owned the property.

The rationale behind this duration is to provide ongoing protection for the insured against defects in title that may not have been discovered at the time of purchase. Title issues can arise long after the closing, such as claims from undisclosed heirs or fraud involving previous owners. Therefore, the coverage continues as long as there is an interest in the property.

Other options either specify a limited time frame, which contradicts the nature of title insurance, or suggest coverage only during the purchase period, which does not align with how title insurance is designed to function. The indefinite nature of the coverage until ownership is relinquished captures the essence of why title insurance is critical for property owners.