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Private general insurer HDFC ERGO on Tuesday launched a title insurance policy, making it one of the first such products launched by private insurers.
Title insurance refers to insurance for the title of a real estate property and is mandatory according to the Real Estate (Regulation and Development) Act 2016, or RERA.
This specialty insurance product provides indemnity to property developers and the subsequent owners of the property against losses and risks related to defects in property title arising out of third party challenges not discovered before the commencement date of the policy.
This could be due to the title of the property belonging to someone other than the one insured, or any other issue pertaining to the property, including fraud and forgery.
Moreover, legal costs incurred are also covered under the policy. Certain known defects in the title may also be covered under the policy by specific underwriting assessment for an additional premium.
The product has been developed because of a requirement under the Real Estate Regulation and Development Act 2016 (RERA), which mandates the purchase of title insurance for all new and ongoing property developments registered with the regulatory body.
"It is crucial and a must-have, for developers not only because it is mandatory but is as an effective risk transfer mechanism," said Anuj Tyagi, Executive Director and Chief Distribution Officer, HDFC ERGO General Insurance.
The new title insurance policy will prove beneficial to real estate developers, property investors and housing finance companies.
It can be obtained by developers and is subsequently assigned to the association of allotees or allotees /members of the housing societies, who are the ultimate beneficiaries of the policy.
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