Which policy provides coverage for lenders to protect their interests in financed properties?

The loan policy is specifically designed to provide coverage for lenders to protect their financial interests in properties that they have financed through a mortgage. This type of policy safeguards the lender from potential losses that may arise due to defects in the title, claims by third parties, or other issues that could jeopardize the lender's investment in the event of a title claim.

When a lender issues a loan to a borrower for purchasing real estate, the loan policy ensures that the lender’s investment is secure. This policy remains in effect until the mortgage is paid off, thus continually protecting the lender’s secured interest in the property.

In contrast, an owner's policy is meant to protect the property owner, not the lender. A leasehold policy covers the interests of a lessee in a leasehold estate, while an exclusion policy typically outlines specific exceptions to coverage but does not provide comprehensive protection for a lender's interest. The focus of the loan policy is crucial to understanding how title insurance functions in real estate transactions, particularly from the lender’s perspective.