Irdai has asked general insurance companies, besides standalone health insurers and specialised insurers, to launch new title insurance products for promotors/developers, allottees and retail property buyers
NEW DELHI: While transferring property, there can be gaps. Hence the Insurance Regulatory and Development Authority of India (Irdai) has introduced a title insurance policy to overcome them.
Title insurance is a form of indemnity insurance that protects a potential property owner against financial loss from defects in title to real property. The policy 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.
Irdai had introduced Title Insurance Products a few years back to safeguard a potential owner of a property against financial loss aroused due to valid reasons. And now the regulator has introduced another beneficial clause for customers in the latest circular.
The Irdai circular said, "Considering the requirements of legal protection for promotors in the early stages of development of the project during financial appraisal, registration and approval with RERA authorities and safeguarding the interests of individual buyers after taking over the physical possession of the property, the regulator needs to expand the current title insurance products suitable to promotors/developers and retail property buyers."
According to the new notification, the Title Insurance covers, "Promoter Legal Expenses (Defence Cost) Policy: This cover will indemnify the insured against legal defence costs only against suits challenging the Title of the project".
Naval Goel, Founder and CEO, PolicyX.com, said, "Promoter Legal Expenses (Defence Cost) Policy means that the expense incurred by the potential owner of the property in legal proceedings such as filing a court case, legal documentation and appointed lawyer's fees filed against the developer, promoter or any other allottee party will now be managed by the insurance. This is further designed to strengthen the stand of the potential property owner and support them in every possible manner to obtain possession of their property."
Further adding to it, TA Ramalingam, Chief Technical Officer, Bajaj Allianz General Insurance, said, "Irdai has recommended introducing Promoter Legal Expense (defence cost) policy, which will indemnify against legal defence costs only against suits challenging the title of the project. As of now, the existing products in the market provide title insurance for the entire project duration. With this, customers can opt for the policy duration as per their requirement."
As mentioned above, currently, the title insurance provides indemnity coverage to developers, allotees and homebuyers against losses due to defects/faults in the title arising out of third-party challenges.
Another significant modification is that now this, i.e. Title Insurance cover, can be individually bought by the customers for their desired duration, which was earlier available for the entire duration.
Ramalingam said, "Currently, this product is available only for Promoters/Developers in the Indian market; in this circular, the regulator has suggested introducing a retail policy for allottee/individual buyers." He said, "Individual buyers and financiers of the property can opt for it at the time of possession, and they can be indemnified from a defect on the title of the property."
The regulator has asked general insurance companies (besides standalone health insurers and specialised insurers) to launch new title insurance products for promotors/developers, allottees and retail property buyers.
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