Title insurance in India: what it covers, what it costs, and whether a buyer needs it

Most Indian home buyers have never heard of title insurance, and almost none know that on a RERA-registered project the developer is already supposed to carry it. Section 16 of the Real Estate (Regulation and Development) Act, 2016, obliges a promoter to obtain insurance in respect of the title of the land and building forming part of the project, to pay the premium, and to transfer the benefit of that policy to the buyers. That single fact changes what a buyer should ask for at booking — because a protection the law already assigns to the developer is one worth confirming exists, rather than paying for a second time without checking.

What the law already requires: RERA Section 16

Title insurance protects the owner of a property against financial loss caused by a defect in the title that already existed but was not known at the time of purchase — a forged link document in the chain, an undisclosed legal heir, an unpaid mortgage the seller concealed, or a prior transfer that was invalid. It is distinct from the property insurance that covers fire or structural damage; title insurance covers the paper, not the building.

Section 16 places the first layer of this protection on the promoter. The section requires the promoter to obtain such insurances as may be notified by the appropriate Government, including insurance for the title of the land and building and for the construction of the project. The promoter must pay the premium, and the benefit of the insurance stands transferred to the allottee or the association of allottees at the time the promoter enters into the agreement for sale. On formation of the association, the underlying policy documents are handed over to it. In principle, therefore, a buyer of a registered flat inherits a title policy the developer paid for.

Why you have probably never seen it

The obligation in Section 16 is conditional. It bites only on the insurances that the appropriate Government notifies, and across most states the notifications that would operationalise mandatory promoter-side title insurance have not been issued or not been enforced with any consistency. The result is a duty that sits in the statute but is unevenly implemented on the ground: some states and some large projects carry it, many do not, and a buyer who assumes the cover exists simply because the project is RERA-registered may find that no policy was ever taken. Title insurance in India remains an evolving product, held back by fragmented land records, patchy awareness, and the absence of uniform state notifications giving Section 16 real teeth.

What a title policy covers — and what it does not

Coverage varies between the few insurers that offer the product, but the standard Indian title policy — approved by the IRDAI — is built to indemnify against title defects that already existed on the date the policy was issued. It is backward-looking. Typical covered risks:

• Ownership found to vest in another party — an undisclosed heir, co-owner or prior claimant surfacing after purchase
• Forgery, fraud or improperly executed documents in the chain of title
• Defective, incorrect or missing entries in the recorded title, and unrecorded easements
• Undisclosed encumbrances — an unpaid mortgage, lien, or a judgment or attachment against the property
• An earlier transfer in the chain that was invalid and clouds the current title

What a title policy does not cover is where buyers most often misread it. It is not a warranty that nothing can go wrong; it is an indemnity for past defects, and it carves out a wide set of exclusions:

• Defects arising after the policy date — future encroachment, adverse possession or land grabbing that begins later
• Physical or structural defects in the building — those belong to construction warranties and property insurance, not title
• Planning, zoning and government-approval problems, including deviations from the sanctioned plan and a missing occupancy certificate
• Boundary disputes and discrepancies that a proper survey at purchase would have revealed
• Changes in the insured use of the property, and statutory rights over minerals, petroleum and similar substances
• Anything the insured knew about and did not disclose, or loss traced to the insured's own misrepresentation during underwriting

Two exclusions deserve emphasis for Indian buyers. Because the cover is only for pre-existing defects, it does not solve the encroachment and professional land-grabbing that plague many parcels after purchase. And because approval and occupancy questions are excluded, a title policy is no substitute for verifying the occupancy certificate and the planning sanction independently.

Buyer-purchased policies: cost and availability

Separate from the promoter's Section 16 duty, a buyer or a lender can purchase their own title policy. In India this is a nascent market. Only a small number of general insurers hold IRDAI approval for the product, and the policies were designed around RERA-registered new-construction projects — they are not yet widely available for resale flats or older, independently held properties, which is precisely where title risk is often highest. Terms, exclusions and the scope of cover differ materially between insurers, so the policy wording, not the brochure, is what matters.

On price, the product is a one-time premium rather than an annual one, and it is reported to run at a fraction of a percent of the property's value — figures cited in the market commonly fall in a range of roughly 0.1 to 0.5 percent, though the number varies by insurer, property value and the risk the underwriter sees, and is sometimes negotiated between buyer and seller. Treat any single quoted percentage as indicative, not fixed, and ask the insurer for the premium against the specific property.

When it is worth considering

Title insurance does not replace due diligence; it sits behind it, covering the defect that even careful diligence could not have found. It is worth weighing in situations where the residual title risk is genuinely higher:

• The property has a long or broken chain of title, multiple past owners, or inheritance and partition in its history
• The land was converted from agricultural use, or the parent title rests on old, hard-to-verify documents
• You are a non-resident buyer relying on remote diligence and a power of attorney, with limited ability to inspect records in person
• The transaction is high-value enough that an unknown past defect would be financially serious
• A lender requires it, or the buyer wants indemnity behind an otherwise clean legal opinion

Equally, it is worth being clear about when it adds little: a policy cannot cure a defect you already know about, cannot fix a missing occupancy certificate, and cannot protect against future encroachment. The disciplined verification a buyer should do anyway — pulling the encumbrance certificate, confirming the recorded owner, checking the occupancy certificate and the RERA registration — remains the primary defence. Title insurance is a backstop for what those checks cannot reach, not a reason to skip them.

SourceReal Estate (Regulation and Development) Act, 2016 — Section 16 (Obligations of promoter regarding insurance of real estate project)

SourceIRDAI — Title Insurance Policy wordings (approved policy document, standard covered risks and exclusions)

SourcePropWatch — What is an occupancy certificate and why it matters

SourcePropWatch — Property fraud in India: the document check that catches each common scam

SourcePropWatch — How to verify a builder's RERA registration before you sign