What does a Leasehold policy relate to?

A Leasehold policy specifically pertains to the insurance related to lease agreements between a lessor (the property owner) and a lessee (the tenant). This type of insurance protects the lessee's interest in the property that they lease, specifically addressing any title defects that may arise during the lease term.

Typically, leasehold insurance is important because it provides coverage for the tenant’s investment in the leasehold improvements made to the property and ensures that their rights under the lease are protected against claims from third parties or potential title issues. This makes it a key component for tenants who invest significantly in the property they are leasing, offering peace of mind regarding their legal claim to occupy and use the property as intended.

While other insurance types are mentioned in the other options, they do not specifically address the unique protections that a Leasehold policy provides within the context of lease agreements.