Final answer:
A standard title insurance provides coverage for known defects and liens, while an extended policy offers more comprehensive coverage, including issues found in a physical survey. The extended policy thus provides greater peace of mind at a higher premium cost.
Step-by-step explanation:
The difference between a standard coverage policy of title insurance and an extended policy of title insurance is that the standard exceptions have been removed on the extended coverage policy.
With standard title insurance, coverage is provided for potential title defects and liens that are listed in the policy documents. However, it usually does not cover things that a physical inspection of the property might reveal, such as unrecorded liens, unpaid assessments, or certain types of easements.
An extended policy, on the other hand, provides additional protection beyond the standard policy, including coverage for issues that would be discovered by a physical survey of the property.
The extended policy is more comprehensive but also comes with a higher premium. This means that although the premium increases, the buyer gains peace of mind by mitigating the risk of future legal issues related to the property's title.