Which types of insurance are commonly associated with the closing of a real estate transaction?

The correct answer is centered on the types of insurance that play critical roles in the closing of a real estate transaction. Property, flood, and title insurance are specifically designed to protect both buyers and lenders during and after the closing process.

Property insurance is essential as it safeguards the buyer’s home and possessions within it against damage or loss due to various risks, such as fire, theft, or vandalism. Flood insurance is particularly relevant in areas prone to flooding, as standard property insurance policies typically do not cover flood damage. This type of insurance helps protect the homeowner against costly repairs needed after a flooding event. Title insurance, on the other hand, protects the buyer from potential disputes over property ownership and covers any losses resulting from claims against the title that were not discovered during the property search process.

In summary, these three types of insurance are fundamentally interconnected to real estate transactions, offering security and peace of mind to all parties involved at the closing stage.