RERA has made it compulsory for developers to get title insurance for all projects, opening a new segment of over Rs 10,000 crore for insurance companies.
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.
Sum assured for title insurance will be the value of the property. 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.