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What does title insurance cost and is it worth it?

Whenever we buy insurance, we inevitably ask ourselves – is it worth it? The calculation in our head weighs the cost of the premium against the potential cost of things going wrong, adding in our own assumptions about risk. With title insurance, the cost-to-benefit analysis has an obvious result: it pays off to protect the biggest investment many of us will ever make.

The cost of not getting title insurance

After purchasing a property, we like to think that the hard part is over and we can finally relax, move into our new home or enjoy the fruits of our investment. But there are many issues that can crop up after settlement that could have remained hidden even during the conveyancing process. Title insurance protects you against these issues, which can include illegal building works, encroachment, miscalculations and fraud.

For instance, one of our clients would have been $140k out of pocket after settling the purchase of their home because important parts of the building had been built without council approval. Another client could have lost $33k over an encroachment issue, a common problem identified only after settlement.

First Title covered the cost for them, saving our clients thousands of dollars as well as preventing many a sleepless night. 

Average cost of title insurance

Compare these costs to the average cost of title insurance with First Title, which ranges from $370* for a strata property with a purchase price up to $500K to about $1488* for a house with a purchase price up to $2m. And since title insurance does not expire as long as you own the property, this protection is a long-lasting one. That means that even if you find out about an issue years after settlement, you’ll still be covered. What’s more, you only pay your premium once, with no excess if you make a claim.

How the cost of title insurance is calculated

The cost of title insurance is based on the property type and purchase price. For example, a house bought at $1,000,000 could have a premium of $831*, while a strata title or vacant land for the same purchase price could cost $663* to insure. Even in a more expensive area like Sydney, the premium for the median house price ($1.6M) is just $1,301* – a minor error, like a miscalculation of outstanding council rates, could easily amount to double that.

If you’re about to purchase a property, it’s a good idea to weigh up the costs and consider getting title insurance. The easiest way to find out how much you’d pay is to get a quote today.

*Premiums vary slightly due to differences in stamp duty across states. Premiums quoted are for NSW/QLD and correct as at 17 March 2022.