Definition of mortgagee's title insurance

policy that protects the lender from future claims to ownership of the mortgaged property. Generally required by the lender as a condition of making a mortgage. In the event of a successful ownership claim from someone other than the mortgagor, the insurance company compensates the lender for any consequent losses.

Example: When Polly sold her home, she was required to buy a mortgagee's title insurance policy so that the buyer could get a mortgage to buy the home. The buyer also purchased an owner's title insurance policy and paid the premium himself.