A title insured by a title insurance policy is considered what type of title?

A title that is insured by a title insurance policy is considered a marketable title. This is because title insurance provides coverage against certain defects or issues that may affect the title, ensuring that it is free from significant encumbrances, claims, or liens that could impede the owner's ability to transfer ownership. A marketable title implies that the title is sufficient to allow the seller to convey ownership to the buyer without risk of future legal issues.

The concept of marketability is particularly important in real estate transactions, as it assures buyers that they are receiving a title that is readily and legally transferable. By having title insurance, buyers gain confidence in the quality of the title they are acquiring and protection against potential future claims that could arise.

The other options—defective title, unclouded title, and unencumbered title—do not accurately capture the condition of a title insured by a title policy. A defective title implies that there are issues or flaws that affect ownership rights, while unclouded and unencumbered titles suggest a perfect state without issues, which may not always be the case when a title is insured. Therefore, the proper characterization of a title covered by a title insurance policy is that it is marketable.