Which type of title insurance protects only the amount owed on the loan?

• A. Mortgagee's Policy
• B. Owner's Policy
• C. Lenders' Policy
• D. Homeowner's Policy

Answer: (A)

The key idea is that title insurance comes in two main forms: one protects the owner's equity, and the other protects the lender’s security interest. The form that protects only the amount owed on the loan is the mortgagee’s policy. It covers losses from title defects up to the loan balance, tying protection directly to the debt outstanding, not to the property's full value. It doesn’t insure the owner’s equity beyond what the loan covers. In contrast, an owner’s policy protects the owner’s equity up to the purchase price or current value. So the mortgagee’s policy is the right choice because it is the lender-focused protection limited to the loan amount.