NEW DELHI: When transferring ownership, there may be gaps. That is why the Indian Insurance Regulatory and Development Authority (Irdai) has put in place a title insurance policy to overcome them.
Title insurance is a form of indemnity insurance that protects a potential homeowner against financial loss resulting from defect in title to real estate. The policy is a retrospective policy where the insured is protected against losses resulting from events that occurred before the date of issue of the policy.
Irdai had introduced title insurance products a few years ago to protect a potential owner of a property against financial loss caused for just cause. And now the regulator has introduced another beneficial clause for customers in the latest circular.
The Irdai circular stated: “Considering the legal protection requirements of promoters in the early stages of project development during financial appraisal, registration and approval with RERA authorities and safeguarding of interests of individual buyers after taking physical possession of the property, the regulator should expand current title insurance products suitable for developers / developers and buyers of commercial properties. “
According to the new notification, title insurance covers the “promoter’s legal costs policy (defense cost): this cover will compensate the insured for legal defense costs only against lawsuits contesting the title of the project”.
Naval Goel, Founder and CEO of PolicyX.com, said: “The developer’s legal fees (defense costs) policy means expenses incurred by the potential owner of the property in connection with legal proceedings such as filing of legal action, legal documentation and an appointed attorney’s fees filed against the developer, developer or any other beneficiary will now be handled by insurance. This is further designed to strengthen the position of the potential owner and support them in any way possible to gain possession of their property.
Adding to this, TA Ramalingam, Technical Director of Bajaj Allianz General Insurance, said: “Irdai recommended introducing a policy of promoter’s legal expenses (defense cost), which will compensate legal defense costs only against disputing lawsuits. the title of the project. Currently, existing products on the market offer title insurance for the duration of the project. Through this, clients can opt for the term of the policy as per their requirement. “
As mentioned above, currently title insurance provides indemnity coverage to developers, beneficiaries and homebuyers against losses due to defects / defects in title resulting from third party disputes.
Another important change is that now this coverage, i.e. title insurance, can be purchased individually by clients for the desired duration, which was previously available for the entire duration.
Ramalingam said: “Currently, this product is only available to promoters / developers in the Indian market; in this circular, the regulator suggested to introduce a retail policy for individual beneficiaries / buyers.” He said: “Individual buyers and financiers of property can choose it at the time of possession, and they can be indemnified against a default in title to the property.”
The regulator has asked general insurance companies (in addition to independent health insurers and specialist insurers) to launch new title insurance products for developers / developers, beneficiaries and buyers of commercial buildings.
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