Title Insurance – Is it Worth It?

What is title insurance?

Title insurance is a specialised insurance policy providing protection to buyers against unknown risks or defects in relation to their property, which may cause them loss or affect their ownership in the future. These unknown risks or defects are often pre-existing, however were not identified during the conveyancing process. Title insurance is relatively new to the Australian Market.   

Why is title insurance recommended?

While conveyancing may uncover many of the risks or defects associated with a property, even the most thorough conveyancing process may not expose all hidden issues.    

What does title insurance cover?
 
A typical title insurance policy covers a range of risks or defects, including:
 
  • Unapproved building works: Enforcement action by a Local Authority in relation to structures that have been built without a permit or council approval   
  • Survey and boundary defects: Incorrect boundaries or encroachment onto a neighbouring property or over an easement 
  • Planning and title defects: Non-compliance with existing planning and zoning laws, defects in title to the land, or unregistered covenants, easements, or tenancies
  • Outstanding rates and taxes: The current owner is liable for any amounts that were not paid by the previous owner
  • Fraud, forgery and identity theft: Affecting the buyer’s legal ownership of the property
  • Registration issues: Where another party registers an interest against the property which prevents the buyer from registering their interest 

What does title insurance not cover?

There are some risks or defects that are not covered by a title insurance policy, including:
 
  • Defects discovered during building and pest inspections   
  • Damage or loss suffered from fire, flood, or natural disaster
  • Non-title matters such as land contamination 

What does title insurance cost?

Unlike many other insurance policies, title insurance is a once-off premium, with no ongoing payments.It is usually at a minimum cost, with no excess payable on claims.
 
What does title insurance do?
 
In the event of a claim against the property, the insurer will cover the legal costs of defending the claim or provide compensation if the claim cannot be defended. The insurer will also cover the costs of rectifying the defect or risk. The policy indemnifies the owner for the entire period of ownership.
 
How to get title insurance? 
 
There are two primary title insurance providers in Queensland – ‘First Title’ and ‘Stewart Title’. The buyer’s conveyancer or solicitor will provide the option to take out title insurance.