Title insurance covers only the amount of the sales price of the property under the conditions of the Title Commitment. There are usually some minor exclusions to the coverage which will be noted in the commitment. The title company will often remove some exclusions for an additional fee. The title policy does not cover the value of the new pool or added value when the market goes up and your property value goes up to $400,000. However, the insurance underwriter is not in business to pay out claims so they will aggressively defend the title on your behalf. The title company researches the property on behalf of the insurance underwriter to assure that there are minimal claims. I put your question to an escrow officer that I work with on a regular basis. To give me an idea of the risk involved, the escrow officer compared title insurance risk to property insurance risk. Where a property insurance company may figure that 40 to 50% of their premium goes to losses, a title insurance company pays only 10% of their premium to losses. Half of that amount is for errors made in documents or tax proration that results in minor payments, not surrender of the property. Title insurance companies are in a position to prevent their own losses and therefore your risk of loss is minimized.