Arizona School of Real Estate and Business (ASREB) Practice Exam 2025 – Your Comprehensive All-in-One Guide to Exam Success!

Title insurance primarily provides protection against financial loss due to title defects. This type of insurance ensures that the buyer's ownership rights are secure and that the title to the property is free from any legal claims, liens, or encumbrances that were not disclosed at the time of purchase. In the event that a title defect is discovered after the purchase, such as an undisclosed heir making a claim, unpaid taxes, or forged documents, title insurance will cover the cost of any legal fees and losses incurred as a result of these issues.

Other forms of protection mentioned, such as property damage or protection against natural disasters, are typically covered by different types of insurance, such as homeowners insurance. Fraud in real estate transactions is a serious concern, but title insurance specifically addresses issues that affect ownership rights rather than fraudulent acts themselves. Thus, the correct answer highlights the essential function of title insurance in safeguarding buyers from financial risks associated with title issues.