When a lender finances a purchase or refinance, its collateral is the property, secured by a mortgage or deed of trust. A lender’s title policy protects that interest: it insures, up to the loan amount, that the borrower holds the title being pledged and that the lender’s lien is valid and in the expected priority position (usually first). If a covered defect later surfaces — an undisclosed prior lien, a recording error, fraud, or a competing claim — the title insurer defends the lien and pays covered losses, so the loan isn’t wiped out by a title problem. The lender’s policy decreases as the loan is paid down and ends when the loan is satisfied. It protects only the lender, which is why borrowers are encouraged to buy a separate owner’s policy to protect their own equity.