Once the buyer purchases the property, his or her name is recorded in the county subject to the lien of the mortgage lender. Title insurance protects the buyer from anyone else taking the property away from him or her on the grounds that the seller did not really own the property. It also protects the buyer from a creditor of the seller who did not put a prior lien on the house, trying to get the money from the buyer.
Title insurance policies are the gold standard for having a clear title. In the very, very rare cases where the title insurance company has made an error in the title search and has missed a lienholder, the title company has made good on the debt.