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If you're buying a property, chances are you've already been told about a number of insurance policies. While your home and contents insurance will protect your physical investment, title insurance can be crucial in protecting your ownership rights.
Title insurance is a policy that provides coverage for risks that could impact the ownership of your home and your legal rights to it. While title insurance is common in the United States, it's still a relatively new product to the Australian market.
Chances are your lender will already have title insurance over your property. Since they hold the title to your property as security, they'll want to protect their investment and their legal rights to the property in the event you default. But their policy doesn't cover you.
However, you can take out your own title insurance policy to cover yourself against risks that ownership issues could arise both before and after settlement. While conveyancing will uncover many of these potential risks, there are other risks it can fail to uncover.
Title insurance also protects you from risks that arise in the future. These can be risks such as forgery and fraud, encroachments and unregistered easements on your property.
Title insurance covers different risks depending on whether your property is a strata or freehold title. It will also provide different types of cover depending on whether you're a home buyer or existing home owner.
For a strata home buyer, title insurance will cover risks such as:
For existing homeowners, title insurance will cover risks such as:
Unlike many other insurance policies, title insurance is a one-off cost. You won't pay ongoing premiums.
There are only two title insurance companies in Australia: First Title and Stewart Title Limited. First Title quotes its policies from $225 for strata properties and from $300 for standard residential properties.
Stewart Title Limited quotes its premiums specific to the state or territory in which the property resides. For example, NSW residential title insurance premiums start at $330 while premiums for strata titles start at $247.50. The premium (including stamp duty and GST) for a $500,000 property is around $500, and for a $750,000 is around $625.
During the home buying process, you're likely to be pitched on a number of different insurance products. It's hard to sort through which are worth your time and which aren't. However, title insurance represents a minimal cost and can provide ongoing peace of mind. Consider your circumstances and decide if title insurance could be right for you.
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