What is Title Insurance and what does it cover?

Have you ever heard of title insurance? In today’s show Garth Brown, from Brown & Brown Conveyancers, explains why it’s so important and what does it cover.


Kevin:  Have you ever heard of title insurance? According to Garth Brown from Brown & Brown Conveyancers, it’s almost as critical if you’re a purchaser of a property as if you were getting a building report. What is title insurance, and what does it cover? Garth joins us.
Hi, Garth. Thanks for your time.
Garth:  Thanks, Kevin. I appreciate the opportunity.
Kevin:  Tell me, what is title insurance?
Garth:  Title insurance is a type of insurance that protects you after settlement. It’s a once-off premium. It comes in and compensates you for things such as if there’s a problem with a boundary, if there’s an encroachment by the property you own or a neighbor encroaching onto yours.
Also, illegal building structures. If you’ve put up a structure without council approval and after settlement, you’re issued with a letter to demolish or upgrade that, title insurance will come in and compensate you for the loss.
It also protects you from things like fraud on title that could happen after settlement. Also, too, if there are any government proposals later on down the track – like to acquire the land for education or a railway or a road – they will come in and help you out and compensate you for any potential loss or try to help out with negotiation.
It’s a wonderful tool. Life is so short, you just have to make sure you have most of your risks covered, particularly after settlement. That’s when all the song and games start up.
Kevin:  It seems to me to be a fairly critical form of insurance. Why isn’t it better known?
Garth:  It’s only come out in the Australian market over the last five to eight years. It’s been in America for probably a couple of hundred years now; it’s just migrated over here in the last ten years. This is a wonderful way to protect purchases, and if your conveyancer or solicitor is using it, they’re really up-to-date on the way to protect their clients.
Kevin:  I’d imagine that you would be recommending this to all of your clients, but in your experience, how broadly used is it within Australia?
Garth:  Particularly in the conveyancing profession with our education seminars that take place, most conveyancers are moving over to using the product.
Kevin:  What does it cost?
Garth:  The cost is so minimal. For a property in New South Wales that’s under $500,000, you’re looking at $450. If you look at the stamp duty on that, that’s probably about maybe $40,000, so for the sake of $450, it’s really worth the coverage that it offers.
Kevin:  This would take into account, I think, things like if you buy a three-bedroom home that’s actually had a masonry wall put down the middle to make it a four-bedroom home, improve its return on investment.
Garth:  In some parts of Sydney, some people will put a wall inside their bedroom to increase the number of bedrooms in the home and rent them out and increase their yield. One particular person did this to an apartment in the Chatswood area. A purchaser came across and decided to buy the apartment. They got a letter from the council, because the body corporate found out about it, sent a letter, and the council found out about it and wanted to send them a fine.
If this purchaser had taken out title insurance, this would have covered them for the fine. You just don’t really know what you’re getting into, and usually, these things happen after settlement, not prior to settlement.
Kevin:  A great point, too, Garth. Thanks for pointing it out to us. It’s called title insurance, and you should be asking your conveyancer about that. My guest this time has been Garth Brown from Brown & Brown Conveyancers.
Garth, thank you so much for your time.
Garth:  Thanks, Kevin.

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