Which policy is for borrowers (mortgagors) and protects the amount owed on the loan as it is paid off?

• A. Title insurance
• B. Mortgagees/lender's policy
• C. Mortgagors/borrow's policy
• D. Extended coverage

Answer: (C)

Borrowers’ title protection is provided by a mortgagor’s (or borrower’s) title policy. This policy is issued to the person taking out the loan and protects the borrower’s interest in the property by insuring the title up to the amount of the loan secured by that property. As the loan is paid down, the protection remains tied to the debt that the property secures, helping ensure that title issues won’t jeopardize the borrower's ability to satisfy what’s owed on the loan.

This differs from a lender’s policy, which protects the lender’s security rather than the borrower’s equity, and from extended coverage, which simply adds more types of risks to the standard title protection.