An important aspect of title insurance is that it is:

Title insurance is a critical component of real estate transactions, providing protection to property buyers and lenders against potential disputes or claims regarding the title of a property. The concept of whether title insurance is prorated pertains to how the cost of insurance might be shared or divided during the closing process.

The correct understanding is that title insurance is never prorated. This is because title insurance is a one-time fee that is paid once at the conclusion of the sale, and it provides coverage for the duration of ownership of the property rather than being spread out over time like many other types of insurance or costs, such as property taxes or homeowners' insurance, which might be prorated.

In a real estate transaction, when the sale closes, the buyer typically pays for the title insurance policy to protect their own interests as well as those of their lender if there is a mortgage involved, thus reinforcing the idea that title insurance is an upfront cost rather than an ongoing or prorated charge. This distinction is important for buyers to understand as they budget for closing costs.

In summary, the nature of title insurance being a lump-sum cost, along with its ongoing protection provided after the transaction, firmly establishes why it is never prorated. This understanding is crucial in real estate transactions.