What is the insurer's obligation under an Owner's policy of title insurance?

The insurer's obligation under an Owner's policy of title insurance primarily involves compensating the insured for substantive losses incurred due to defects in the title that were not excluded from coverage. This means that if a claim arises that negatively impacts the ownership interest of the insured—such as undisclosed liens, fraud, or issues arising from prior ownership—the insurer is responsible for financially compensating the insured for those losses.

This obligation to pay for substantive losses is rooted in the fundamental purpose of title insurance, which is to provide peace of mind to property owners by ensuring they are protected against financial setbacks stemming from unknown title defects. While the insurer may also have responsibilities regarding the defense of a title, the primary and most crucial aspect of an Owner's policy is the fiduciary duty to pay for actual losses related to title defects as they occur, which is ultimately what benefits the insured in the context of ownership.

The other answer choices incorrectly capture the full essence of the insurer's obligations. While defending the insured can be a part of the coverage, it isn’t the sole obligation, nor is it guaranteed in all situations. Similarly, protecting the insured from all claims would be an overstatement, as there are various exclusions that limit the insurer's liability. Covering only defense costs