Property & Title Insurance

Title insurance is part of every major real estate transaction in the United States and Canada. For a one-time premium, an insurance company assumes the obligation to indemnify the real estate buyer in case title to the property is defective. In effect, the buyer relies on a policy of title insurance to guarantee that he or she will actually own the property to be purchased. In the event of a lawsuit disputing the title, the title insurance company will defend the buyer in court and if the lawsuit is lost will pay or cure all valid claims or losses up to the amount of the policy. Title insurance may be obtained during or after the purchase of real estate.

In the Dominican Republic, as in many Latin American and European countries, the government provides title insurance. The Land Registry Law establishes an indemnity fund with which to pay claimants who due, for example, to an error of the Registrar, are deprived of their property. Unfortunately, the indemnity fund never collected sufficient funds to become operative and property owners remain unprotected. Recently, however, two American title insurance companies have begun to offer their services to buyers of Dominican real estate: First American Title Insurance Company and Stewart Title.

Among the risks covered are: title vested on another person; title defect, lien, charge, privilege, mortgage or encumbrance; forgery, fraud, undue influence, duress, incompetence, incapacity or impersonation in the conveyance; lack of right of access to and from the property; easement or right of way on the title; invalidity of any document upon which the title is based because it was not properly executed, sealed, acknowledged, notarized, delivered or recorded; invalidity of any document upon which the title is based because it was executed under a falsified, expired or otherwise invalid power of attorney; erroneous or inadequate legal description of the land.

 

What type of property insurance is available in the Dominican Republic?

 

Insurance in the Dominican Republic include “Fire and Related”. Included risks are fires, thunder and lighting, earthquakes, hurricanes, floods, malicious damages caused by strikes or vandalism, smoke, car and airplane collisions.  Insurance coverage is based on replacement cost.  If there are damages, caused by causes covered by the policy, the insurance company will pay replacement costs of repairs with materials of equal or similar to damaged.

 

In terms of mayor catastrophes (hurricanes, earthquakes, floods) these are subject to a 2% deductible of the insured value. 

 

Is property insurance mandatory in the Dominican Republic?

 

No.  However, it is mandatory to insure with an established insurance company authorized by the “Superintendencia de Seguros”. If you have a mortgage, the bank issuing the loan will add the property insurance to your mortgage loan using the bank's approved property insurance company.

 

How much is the property insurance policy? 

 

Property insurance can fluctuate from year to year and depends on the reinsurance international markets.  Currently, the average cost is 8.50 pesos for every 1,000 pesos of insurance, plus 16% IVA Tax.

 


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