MUMBAI: Private sector general insurer HDFC Ergo has launched a title insurance policy, a first in the private insurance segment, under which it will offer cover to property developers. This speciality cover provides indemnity to property developers and the subsequent owners of the property against losses and risks related to defects in property titles arising out of third-party challenges not discovered prior to the commencement of the policy due to different ownership, the non-life insurer said in a statement.
The product has been developed stemming from the requirement of 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. This title insurance policy will be beneficial to real estate developers, property investors and housing finance companies.
The policy will also cover ownership issues, inadequate descriptions and plans in historic deeds of the property, fraudulent transactions by a third-party that adversely affects the insured’s rights over the title of the property, title being subject to unknown burdens which may have been imposed in historic deeds executed prior to the commencement date, etc.
Moreover, defense costs/legal costs incurred are also covered under the policy. Commenting on the new product, Anuj Tyagi, executive director and chief distribution officer at HDFC Ergo, said, “Title insurance will provide customers’ the peace of mind from title risks related to the land on which the property rests.”
“It is crucial and a must-have, for developers not only because it is mandatory but is as an effective risk transfer mechanism,” he added. The policy can be obtained by developers and is subsequently assigned to the association of allottees or allotees/members of the housing societies-the ultimate beneficiaries of the policy. PTI
