Insurance companies have so far not covered land transactions and they say the reason for missing cover is unreliable land records, which can be challenged.
After the implementation of Rera, it is mandatory for developers to provide written affidavit to the buyer stating that the legal title to the land contains legitimate documents of ownership. This policy covers buyers of property against loss and settlement costs, litigation funds arising from problems in the land title discovered after purchase. HDFC Ergo and SBI General are working on launching title insurance policy.
“As per Rera, every builder will have to buy title insurance and we expect the entire potential in terms of premium to be Rs 10,000 crore,” said Anurag Rastogi, member of Executive Management - HDFC Ergo. “Demand has always been there but there was no regulatory requirement.”
Sum assured for title insurance will be the value of the property. Five -six large builders have shown interest in buying title insurance to cover loss of property and cover the legal expense in case of faulty land records.
Given the lack of records, title insurance may not become a big segment just yet.
“Most land records and manuals and are yet to be digitalised. The ecosystem is yet to mature and given the existing problems with land records, implementation of title insurance could still be difficult and could take up to two-five years for Rera to be fully implemented nationwide,” said Pushan Mahapatra,CEO, SBI General Insurance Company. “Large developers, financiers would like to buy title insurance.”
Mostly, it will cover issues arising out of forgery and fraud or claims arising out of documents not created properly. Interestingly, if property value appreciates, the policy will increase the limit of indemnity.
Source- ET Realty
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