What is "title insurance" designed to protect against?

Title insurance is specifically designed to protect property owners and lenders from potential losses that may arise from defects in the title of a property. These defects could include issues such as fraud, claims from previous owners, liens, or other legal complications that may not be uncovered during the title search before a property transaction. The primary function of title insurance is to ensure that the buyer has clear ownership of the property, free from unforeseen claims or legal challenges.

The other options address different aspects of real estate concerns. Natural disasters, such as floods or earthquakes, typically fall under homeowners insurance or hazard insurance, not title insurance. Declines in property market value relate to market conditions and investment risk, which aren't covered by title insurance. Legal fees associated with property disputes may be handled under various legal insurance products but are not a focus of title insurance, which centers on the validity and security of ownership itself. Therefore, the emphasis on protecting against title defects makes the first option the correct answer.