Should there be a claim against a title, the title insurance company negotiates with the other party to settle the claim, defends the title in court (if necessary), satisfies any covered claim for which it is responsible and pays for the costs incurred in defending the title.  Adverse possession, foreclosure, bankruptcy and judgments are examples of legal procedures that would affect a title.  This is why it is highly recommended that the buyer purchase title insurance as part of the closing.