A two year old Working Group constituted by the insurance regulator IRDAI under T. L. Alamelu, member(Non-life), IRDA has made various recommendations,including two new product structures for Title Insurance.
The two new products which are suggested by the WG are- Legal Expenses Policy for Land Title Owners and Developers/Promoters and Retail Policy for Allottees, individual customers and financiers who purchase units in RERA projects.
The promoter can opt for the full comprehensive product which is already available with insurance companies. Promotor may also opt for a minimum legal defence cost liability policy e.g.10% of project value up to Rs 25 crore sum insured while in process for registration and approval with Real Estate Regulation and Development Authority (RERA) authorities.
While the product for retail individual buyers may be sold at the time of handing over of the property or collecting last instalment or during possession/registration or transferring Title rights of the property.
Title Insurance products are currently offered by only a few general insurers in the Indian market and the features of these products, namely the terms and conditions, scope of coverage etc vary from insurer to insurer.
It is suggested to put in place synchronised efforts to popularise the new insurance products so that there is demand for the Title Insurance product from individual buyers and financing banks/institutions as well.
Title Insurance is a form of indemnity insurance that insures against financial loss from defects in Title to real property. In certain jurisdictions, institutional lenders require Title Insurance to protect their interest in the collateral of loans secured by real estate.
In India, the Real Estate (Regulation and Development) Act, 2016, for the first time, gave statutory recognition to the concept of ‘Title Insurance’..It provides that a promoter shall obtain all such insurances as may be notified by the appropriate Government including but not limited to Title of the land and building as part of the real estate project and construction of the real estate project.