Page 50 - The Insurance Times October 2021

Circular

IRDAI Circular

Title Insurance Products (a) Promoter Legal Expenses (Defence Cost) Policy: This
cover will indemnify the insured against legal
IRDAI/CIR/MISC/243/09/2021
defence costs only against suits challenging the Title
Date:08-09-2021 of the project.

(b) Allottee/Individual Buyer Retail Policy: This cover
1. Title insurance is a form of indemnity insurance that is designed to indemnify the insured against loss
protects a potential owner of a property against
from a defect on title of property. The policy may
financial loss from defects in title to real property. The
be opted by the individual buyer and financiers of
policy is a retrospective one where the insured is
the property at the time of the possession.
protected against losses arising from the events that
occurred prior to the date of issuing the policy. The policy wordings developed by the Working Group
for the above products are given in the Annexure.
2. There are a few Title Insurance products in the Indian
5. The main objectives of new Title Insurance products are
marketcurrently. However, considering the
to provide cover to;
requirements of legal protection for promotors in the
early stages of development of the project during (a) promoters/developers, preferring to optfor a
minimum legal defence cost;
financial appraisal, registration and approval with RERA
authorities and safeguarding the interests of individual (b) end usersi.e., allottees/individual buyers/
buyers after taking over the physical possession of financiersat the time of possession/handing over of
property, there is aneed to expand the current title the property unit for protection against any legal
insurance products suitable to promotors/ developers suits in future.
and retail property buyers.
6. All general insurers are, therefore,encouraged to file
3. In order to ensure that the general insurers offer basic these products as per the procedure required under the
Title Insurance covers for legal liabilities of promotors/ extant product filling guidelines. The insurers may also
developers in case of any loss caused to allottees design and filesimilar products, keeping in view the
duetodefective title of the property, protection for minimum coverage as specified in the given policy
individual buyers for the purchased units in projects and wording. The filing of the said product/s may be carried
to facilitate easy marketability of these products, the out at the earliest to respond to the requirements
Authority had constituted a Working Group to suggest, ofpromoters/developers and retail property buyers.
inter alia, product construct and policy wording for two Please acknowledge this circular and confirm having
new products in addition to the existing products. noted its contents.
4. Accordingly, the Working Group hassuggested product
Yegnapriya Bharath
structure, coverage and policy wordings for the
Chief General Manager (Non-Life)
following products.
50 The Insurance Times, October 2021