What is meant by the effective date of a title insurance policy?

The effective date of a title insurance policy refers to the point in time when the insurance coverage actually begins, which is typically at the closing of the real estate transaction. This is crucial because it establishes the period during which the policyholder is protected against any defects in the title or other issues that may arise.

In practice, once the closing occurs and the transaction is finalized, the title insurance policy becomes active, offering its protections from that moment onward. This ensures that any claims related to issues arising from the title prior to this date will be covered by the policy, as long as they fall within its parameters.

Understanding this concept helps ensure all parties involved in a real estate transaction are clear about when protection begins, which is essential for financial planning and legal assurance.