ALTA Practice Exam – Complete Prep Resource

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In title insurance, what does the effective date signify?

The date when the policy is first drafted

The date the title insurance is bound and coverage begins

In title insurance, the effective date signifies the moment when the title insurance policy is officially in effect and when the coverage provided by the policy begins. This is crucial because it establishes the timeframe during which the insurer is responsible for potential claims related to defects or issues with the title that could adversely affect ownership. Essentially, this date marks the transition from the underwriting process to the active period of coverage for the insured party.

Understanding the effective date is vital for both the insured and the insurer, as it provides clarity regarding the protection period and the scope of coverage against potential claims. This ensures that any risks present prior to this date are not covered, thereby focusing protection on events or issues that arise thereafter.

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The date when the premium is paid

The date when any claims must be filed by

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