New Delhi: Whenever a property is transferred to someone else, the title also changes. Hence, while transferring the property, some gaps remain during the transfer process, and some defects in the title are also observed. To overcome this, the Insurance Regulatory and Development Authority of India (IRDA) has introduced a title insurance policy.
Keeping in view the requirements of legal protection for promoters in the early stages of development of a project during financial appraisal, registration and approval with RERA authorities and protecting the interest of individual buyers after taking physical possession of the property, The regulator wants to expand the current title insurance products to suitable for promoters/developers and retail property buyers.
The regulator has now asked general insurance companies (other than standalone health insurance companies and specialized insurance companies) to launch new title insurance products for promoters/developers, allottees and retail property buyers.
Title insurance provides indemnity coverage to developers, allottees and home buyers for damages caused by defects/defects in the title arising out of these challenges.
As per the circular of IRDA, “Title insurance is a form of indemnity insurance which protects the potential owner of the property against financial loss from defects in the title of real property. The policy is a retrospective one where the insured is protected against damages caused. Events that occurred prior to the date of issue of the policy.”
As per the circular, the main objective of the new title insurance products is to provide cover to:
(a) the promoters/developers, prefer to opt for the lowest legal defense cost;
(b) The end user, i.e., the allottee / individual buyer / financier at the time of possession / handing over of the asset entity for protection against any future legal litigation.
TA Ramalingam, Chief Technical Officer, Bajaj Allianz General Insurance said, “Title insurance in India is at an early stage. I think the IRDA circular will help increase its acceptance in the country. Currently, this product is available for only Promoters/developers in the Indian market; In this circular, the regulator has suggested introduction of a retail policy for allottees/individual buyers. Individual buyers and financiers of the property can opt for the same at the time of possession, and will be compensated by a Further, IRDAI has recommended the introduction of Promoter Legal Expenditure (Defence Cost) policy, which will only compensate against legal defense cost against litigation challenging the title of the project. As of now, the existing products in the market offer title insurance for the entire project duration. With this, customers can opt for the policy term as per their requirement.”
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