NEW DELHI: In a bid to protect property buyers against defective title deeds, regulator IRDAI has asked general insurers to launch title insurance policies under a revised format at the earliest. Title insurance is a form of indemnity insurance that protects the potential owner of a property against financial loss from defects in title to the real property.
The Insurance Regulatory and Development Authority of India (IRDAI) had set up a Working Group to suggest title insurance products to cover legal liabilities of developers as well as individuals against losses on account of defective titles.
In line with the suggestions of the working group, IRDAI has asked the general insurers other than standalone health insurers and specialized insurers, to come out with title insurance policies.
“All general insurers are…encouraged to file these products as per the procedure required under the extant product filling guidelines. The insurers may also design and file similar products, keeping in view the minimum coverage as specified in the given policy wording.
“The filing of the said product/s may be carried out at the earliest to respond to the requirements of promoters/developers and retail property buyers,” it said.
The policy, it added, “is a retrospective one where the insured is protected against losses arising from the events that occurred prior to the date of issuing the policy.”
The main objectives of the “new Title Insurance products” are to provide cover to promoters/ developers, preferring to opt for a minimum legal defence cost, and end users (allottees, individual buyers and financiers) at the time of possession/handing over of the property unit for protection against any legal suits in future.
Currently, there are a few title insurance products in the Indian market.
However, considering 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 safeguarding the interests of individual, there is a need to expand the current title insurance products suitable for all stakeholders.
Among others, the working group had suggested ‘Promoter Legal Expenses (Defence Cost) Policy’. The policy was recommended to indemnify the insured against legal defence costs only against suits challenging the title of the project.
It had also made a case for ‘Allottee/Individual Buyer Retail Policy’, designed to indemnify the insured against loss from a defect in title of the property.
Source: Economic Times