- A contract whereby the insurer for a valuable consideration agrees to indemnify the insured in a specified amount against loss through defect of title to real estate wherein the latter has an interest either as purchaser or otherwise. Fochrenbach v German-American Title & T. Co. 217 Pa 331, 66 A 561. A policy of title insurance has been said to be a contract in the nature of a covenant against incumbrances. It differs, however, from a covenant of warranty and the rules applicable to such a warranty do not apply to the policy. Ordinarily no liability arises under such a policy except for actual loss sustained, but one already in possession claiming to be the owner when such a policy issues to him may recover thereon though he expends nothing, and hence suffers no loss in reliance on the policy, his loss occurring from a defect in the source of his title. 29A Am J Rev ed Ins § 1372.
Ballentine's law dictionary. Anderson, W.S.. 1998.
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