Can an encumbrance be discovered via a title insurance policy?

The correct answer highlights that a title insurance policy typically covers existing encumbrances. Title insurance is designed to protect property owners and lenders from any issues related to the title of the property, such as liens, easements, or other claims that may exist against it at the time the policy is issued. When a property is purchased, a title search is conducted to identify any potential encumbrances that could affect ownership or use of the property. If these encumbrances are discovered, the title insurance can provide coverage against these issues and help address any financial losses that may arise from them. Therefore, having this insurance is a vital part of real estate transactions as it ensures that the buyer or lender is protected from challenges to their ownership rights based on these existing encumbrances.