Title Insurance
An insurance policy that protects the property owner or lender against financial loss arising from defects in the property's title or other covered risks.
What is a Title Insurance?
Title insurance is a one-off insurance policy that covers losses arising from defects in the property's title that were unknown at the time of purchase. In New Zealand, it's offered by specialist providers such as First American Title and Stewart Title.
Title insurance can cover a range of risks including unknown easements or covenants, boundary disputes, fraud or forgery on the title, building work without proper consents, and issues that would have been revealed by a survey. It can also cover some risks that a standard LIM or title search might not uncover.
Unlike most insurance, title insurance is paid as a single premium at the time of purchase and covers you for as long as you own the property. Premiums are relatively affordable — typically $300 to $1,500 depending on the property value and level of cover.
Why It Matters for Due Diligence
Title insurance is not a substitute for proper due diligence — you should still get a LIM, building inspection, and title review. However, it provides an additional safety net for risks that even thorough due diligence might not uncover.
Title insurance is particularly worth considering for cross-lease properties (where flats plan issues can emerge), older properties (where consent history may be incomplete), and properties where you're under time pressure and can't complete all investigations before going unconditional.
How to Check
Ask your lawyer about title insurance options when you're buying. They can recommend a provider and arrange the policy. Compare the cover offered by different providers, paying attention to exclusions and the claims process. The premium is typically paid at settlement.
Frequently Asked Questions
Is title insurance worth it in New Zealand?
For a relatively modest one-off cost, title insurance provides peace of mind against title-related risks that may not surface during standard due diligence. It's particularly valuable for cross-lease properties and older homes. Most lawyers recommend considering it.
Does title insurance cover building defects?
Title insurance may cover losses related to lack of building consent or code compliance, but it does not cover physical building defects. You still need a building inspection to assess the condition of the property.
Related Terms
Registered Interest
GlossaryAny right or claim recorded on the property's certificate of title, such as a mortgage, easement, covenant, or caveat.
Caveat
GlossaryA legal notice registered on a property's certificate of title warning that someone claims an interest in the property.
Easement
GlossaryA legal right allowing someone to use part of another person's land for a specific purpose.
Covenant
GlossaryA legally binding restriction or obligation attached to a property's title that controls how the land can be used.
Cross-Lease
GlossaryA form of property ownership where multiple owners share the freehold of a single piece of land and lease their individual dwellings from each other.
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