Just when you thought buying a property couldn’t possibly involve one more fee, charge, or levy, there's one more optional insurance that could prove a godsend.

Title insurance provides protection from any financial losses involved with your property’s title. Some examples of instances in which losses can occur include:

  • If there’s an existing debt on the property

  • If another party claims ownership of it

  • If there’s already an illegal or non-complaint structure on it

  • If an error to do with boundaries raises a future issue

Unfortunately, these are all real-world examples. But let’s start with the basics so you can best make a judgement on whether you need property title insurance.

What is a property title and what trouble can it cause?

First up, every property comes with what’s called a ‘title’ – essentially a legal document that records the details of the property. These details include who owns it and its exact boundaries. Different types of properties will have different titles, but all properties in Australia have a title registered with a central titles office administered by a state or territory government.

As well as ownership, property titles also record whether there are any encumbrances – or restrictions – on a property. The most common of these are:

  • An existing mortgage on the property

  • A ‘caveat’ – a legal notification that someone else has an interest in the property that stops it from being sold or makes it subject to other restrictions

  • A ‘covenant’ – a registered legal restriction on how a property can be used or developed

  • An ‘easement’ – which gives someone other than the owner the right to use a portion of the land for a specific purpose, such as public access or a future carriageway

What if a title search uncovers an issue?

When a buyer decides to purchase a property, they will generally engage a conveyancer or solicitor to carry out a title search to check there are no encumbrances on the property, that its boundaries line up with official records, and that rates payments are up to date.

Prior to settlement, if any title issues are discovered, the prospective buyer can be alerted. Some issues, such as unpaid rates, can be rectified before the sale, but many major issues can’t and will remain on the title regardless of a change in ownership. In these cases, a solicitor may provide legal advice not to proceed with the sale, depending on the issues that are uncovered.

Sometimes the decision may be taken out of the buyer’s hands. Lenders may choose not to provide a home loan if there are title issues associated with a property.

But not all title issues are necessarily uncovered in a title search.

What if a title issue arises after settlement?

Common issues that bite after a new owner purchases a property often involve the structures on it.

Sometimes a previous owner may have carried out extensions or renovations without receiving local council approval. Other times, such work may have gone beyond the approvals granted.

These issues may not be apparent immediately after the sale. Some can arise months or even years after settlement has taken place. Although the issue may not have been caused by the current owner, according to the title, it's the current owner’s responsibility to bear the cost of rectifying it.

This is where title insurance can come in very handy.

How does title insurance work?

Unlike other insurance policies, title insurance is a one-off payment that covers the property for the entire time you own it. Many proponents of title insurance advise owners to take it out at settlement. Different insurance policies cover different title types: freehold and strata properties, as well as vacant land.

Basically, title insurance covers for out-of-pocket expenses if any issue arises due to issues with the title in the future. Depending on the specific policy, it can cover costs associated with:

  • Demolition or rectification of any illegal or non-compliant structures on the property carried out by a previous owner

  • Errors in public records, or by local councils or conveyancers/solicitors in reporting issues such as outstanding rates or land tax attached to the property

  • Incorrect public records regarding heritage, easements, drainage, and sewerage issues affecting the property

  • Boundary errors or boundary clarification costs arising from a dispute

  • Compulsory government land acquisition that you weren’t made aware of before settlement

  • Someone else claiming rights over the property, including access rights

  • Financial losses from fraud, forgery, or identity theft pertaining to the property

  • Any restrictions on the property that didn’t appear on public records

  • Previous violations of zoning or subdivision bylaws

Different policies may omit some of these scenarios so, as with all insurance policies, it’s imperative to read the fine print to understand exactly what's being covered.

What’s not covered by title insurance?

Title insurance is quite specific in what it covers, and it generally doesn’t cover anything that would already be covered by standard home and contents insurance, for example.

It also doesn’t cover any of the above issues if you created said issue yourself or agreed to it. It only applies to risks that cause out-of-pocket costs to the property owner.

How much does title insurance cost?

The cost of title insurance depends on where your property is situated, what type of property it is, and its value.

Under one insurer, title insurance on a standard residential property – house or strata unit with surrounding land with a median Australian home value of around $814,000 (as at January 2025) – will cost between $880 to $970 (including GST and stamp duty). Premiums are typically less for strata units with no surrounding land and for vacant land.

Currently (as at January 2025), there are two insurance companies in Australia offering title insurance – First Title and Stewart Title Limited.

When to take out title insurance

Sometimes a lender may require or recommend a property owner to take out title insurance as part of a property settlement. It may be also recommended by conveyancers and solicitors, but it's generally an optional insurance.

Even after a property has settled, existing owners can often choose to take out a title insurance policy, although there may be some varied terms and conditions. Again, it’s wise to check the policy’s fine print before signing up.

Is title insurance really worth it?

Like many insurance policies, the value of title insurance is only apparent when you need it. It may be more worthwhile taking out title insurance on certain types of properties where boundaries, subdivisions, or previous records are less clear, or the property itself may present risk factors. Your conveyancer or solicitor is the best person to ask for advice.

One upside is that title insurance is a one-off payment that will cover you while you own that property and not a recurring cost. As with all insurance decisions, it should be weighed up against perceived risks and your own individual circumstances.

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