Is property insurance necessary?

Q: I am planning to book a flat in the city and will take a loan for the same purpose. Is it necessary to obtain a property insurance before taking a home loan?

Anuj Gupta, Mumbai

22nd November 2011

Home Loan in Mumbai

home loan

property insurance

term insurance

home & contents insurance

how to choose home insurance policy?

Follow Discussion

Also see discussions for

Mumbai Home Loan Home Loan in Mumbai

Replies (3)

Hi All,
It is very common practice of the sales representative now a days. They will forcing you to buy property insurance from them claiming it is mandatory as per RBI rules. Then certainly a question will come into your mind. Is that true and should I buy the property insurance from them or can I explore from the market also? So, don't worry. You don't need to take any property insurance.

Amreesh Murugan,

28th January 2016

Comment

Right Amreesh,
These kinds of queries have become very common as banks want to protect their interests while giving a home loan as well as to earn commissions on the insurance products that they sell. But one thing is very clear. There is no requirement by the Reserve Bank of India that any kind of insurance needs to be mandatorily taken at all while taking a home loan from a bank.

Aneek Das,

28th January 2016

I would advise you to take a term insurance instead of home insurance as it will cover your home loan plus it will also take care of your family too with surplus amount. Home insurance is mandatory because the banker takes a precautionary measure thinking of uncertain event so that the loss can be recovered. When you apply for a home loan and already have a term insurance to show them they wont ask you to take home insurance and you can definitely save money in it.

Deepali Mohite,

12th January 2016

Comment

Deepali is right. Home insurance covers the cost of loss or damage to the building you own and contents insurance covers the cost of loss or damage to your possessions. They are often bundled together as a ''home and contents insurance'' package but they are actually separate policies. So you will need to work out what cover you need for each.

Ayesha, Delhi-NCR

28th January 2016

Most banks do not look for a property insurance while disbursing home loan. However, your property will be a valuable insurance, so it is better to go for a property insurance. The home insurance rates are very affordable especially when bought for a long duration say 10 years. It would cost close to Rs. 50 per lakh of property value per year.

Tarun Shah, Ahmedabad

22nd November 2011

Comment