What coverage does the Loan Policy provide?

The Loan Policy specifically provides coverage for the interest of the mortgagee’s Deed of Trust. This type of policy is designed to protect the lender’s investment in the property by ensuring that the mortgage is secured against any title issues that could affect their rights to foreclose or reclaim the property if the borrower defaults on the loan.

The Loan Policy typically covers the amounts loaned to the borrower and ensures the lender's priority over other claims against the property. In the event of a dispute regarding title, this policy offers the lender legal recourse, covering potential losses due to defects in title, liens, or encumbrances that were not disclosed prior to the mortgage being established.

Other options like coverage for the fee simple interest pertain to the property owner’s rights, while coverage against title defects is broader and encompasses all types of title issues, not specifically tailored to lenders. Coverage for property damage, on the other hand, is not related to title insurance and is typically covered under homeowner’s insurance policies. Thus, the Loan Policy’s specific focus on protecting the mortgagee's interest is what makes it the correct answer.