Certificate In Mortgage Advice And Practice (CeMAP) 2 Practice Exam

What does a title indemnity policy protect against in property transactions?

Ownership claims by others Mortgage interest rate fluctuations Insurance coverage of natural disasters Building code violations

Correct Answer:

Ownership claims by others

Explanation:

Title indemnity insurance protects the ownership of a property by covering losses that arise from defects in the title which aren’t found by a standard title search. If someone later asserts an ownership claim or a right that could affect the title—such as a claim by another party, a forged or incorrectly recorded document, missing heirs, or an undisclosed right of way—the policy helps pay for the financial loss and the costs of defending the title. It’s about protecting who owns the property and the lender’s security, not about later changes in mortgage rates, weather-related damage, or building code issues. This type of policy is especially useful when there are known SAMPLErisks in the title that can’t be completely eliminated through normal conveyancing.

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