Policy Update: IRDAI working Committee Suggests Two New Types of Title Insurance Covers

Title Insurance Oct 5, 2021

A working committee constituted by the Insurance Regulatory and Development Authority of India (IRDAI) suggested two new types of title insurance policies- promoter legal expenses policy and allottee retail policy in September, 2021.

About title insurance

A title insurance protects the buyer of a property from any financial loss that she may suffer on the purchase of a property with a defective title. A property title could be defective if the property has been bought from someone who was not its actual owner, or if it has encumbrances such as, mortgages or outstanding tax dues.

Regulatory framework so far

Section 16 of the Real Estate Regulatory Act (RERA), 2016, first provided for the mandatory purchase of title insurance by real estate developers (‘promoters’) for new projects whose area exceeds 500 square metres and contains 8 or more flats. Subsequently, in October 2016, an IRDAI working committee submitted a report- ‘Title insurance in India’, which made recommendations on issues such as the scope of coverage and policy underwriting rules.

As of date, in the Indian market, there are 8 title insurance products filed with the Insurance Regulatory and Development Authority of India (IRDAI) , which are being currently offered by insurers. The products are being offered by  The New India Assurance Company Limited [2], National Insurance Company Limited, HDFC ERGO General Insurance Company Limited, ICICI Lombard General Insurance Company Limited, Tata AIG General Company Limited [3], Bajaj Allianz General Insurance Company Limited, Liberty General Insurance Limited and the Oriental Title Insurance Policy.

What's new?

According to an IRDAI circular released in September, 2021, the regulator's working committee recommended 2 new types of title insurance policies-

  • Promoter legal expenses policy- This policy cover will indemnify the insured (the promoter) against legal defence costs in the case of suits challenging the title of his project
  • Allottee retail policy- This cover is designed to indemnify the insured (an individual buyer) against loss from a defect in title of the property. The policy may be opted for by the individual buyer and financier of the property at the time of the possession. This type of title insurance cover is commonplace in the United States.

(Take a look at our white paper titled ‘Title Insurance in India’ for a detailed review of the regulatory framework governing the title insurance sector in India and how it compares with the regulatory of the United States)

Image by Parth Savani on Unsplash


[1] IRDAI Order- Working Group to Revisit the product structure of Title Insurance

[2] IRDAI- Non-life Products, 2017-18

[3] Ibid


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