What is title insurance?

Title insurance protects lenders against loss caused by property risks related to the legal interest in the mortgage and security property, including freehold and leasehold ownership interests. Title insurance coverage commences on settlement of a mortgage and lasts for the life of the mortgage, for a one-time premium payable at settlement.

In Australia, a wide range of lenders use title insurance to manage property-related risks, including major trading banks, non-banks, building societies and wholesale funders.

Title insurance for residential and commercial lenders

Title insurance protects lenders’ legal interest against known and unknown title defects on a property. It is a no-fault indemnity, which means that if a claim arises it is not necessary to prove negligence on the part of a third party. The fact that you have suffered a loss covered by the policy is enough to trigger a claim.

Why do lenders need title insurance?

In countries that use the Torrens title system such as Australia and New Zealand, title insurance can provide you with additional risk cover to strengthen and enhance your legal interests in the mortgage and security property.

We recommend lenders take out title insurance because it covers property-related risks that are not covered by other forms of insurance. Title insurance reinforces your position as a mortgagee and protects against the risk that the mortgage is not valid, enforceable or subject to any prior interests or encumbrances.

Types of risks covered by title insurance

Covered by
First Title

Failure to obtain correct priority with mortgage registration  
Invalidity or unenforceability of the mortgage  
Fraud or forgery  
Loss of priority through fraud or other circumstance  
Contravention of zoning laws  
Contravention of easements, rights of way and covenants recorded on the title to the land  
Unauthorised or illegal structures  
Illegal sewerage connections  
Encroachments by or on the land  
Adverse affectations or resumption notifications by any government or statutory authority