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Is it Mandatory to Buy a Home Insurance Policy for Your Home Loan?

Buying your dream house can be one of your most significant investments in life, for which you might avail of property loans. However, banks or financial institutions often ask homeowners to buy home insurance to protect their investments. Therefore, the question arises: is buying a property insurance policy mandatory to get a home loan? Let us find out.

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RBI and IRDA Regulations for a Property Loan and Property Insurance

When applying for a home loan, there is a big confusion regarding, 'whether home insurance is mandatory in India'. Therefore, it is crucial to clarify that neither the RBI (Reserve Bank of India) nor the IRDA (Insurance Regulatory and Development Authority of India) has made home insurance compulsory for home loan buyers. Based on this notion, any financial institution or bank can insist borrowers get a home insurance policy for home loans.

Here are some key points to keep in mind:

  • Internal Guidelines: If a financial institution or bank requires home insurance compulsory with a home loan, it will be based on their internal policies. In simpler terms, they cannot claim that RBI or IRDA mandates it.
  • Freedom of Choice: Even if a lender or banks make home insurance compulsory, borrowers can choose any home insurance policy from any home insurance company they prefer.
  • Compare Policies: It is advisable not to blindly purchase home insurance from the same institution offering you a home loan. Instead, take the time to compare different policies from various insurers to find the one that suits your needs and budget. You can also visit the official website of Policybazaar Insurance Brokers Private Limited to compare & buy home insurance online without any hassles.

What to Do If Financial Institution Forced You to Buy Home Insurance Policy?

In case your financial institution has some internal guidelines for compulsorily having home insurance to avail of home loan benefits, it is not mandatory to buy insurance coverage from the same. However, if your bank insists on buying home insurance from them only, consider the following steps:

  • Compare policies: Compare home insurance quotes offered by financial institutions with the other insurers.
  • Evaluate premiums: If the difference is minimal, give it a 'yes'. It may be convenient to opt for the financial institution's offerings in this case.
  • Refuse if overpriced: If the lender's home insurance premium is significantly higher than the other home insurers in the market, it is wise to decline their proposal. In addition, look for other prominent factors, such as customer assistance facility, additional services, claim settlement process, etc.
  • Raise complaint: If the financial institution remains uncooperative, file a complaint with the manager.
  • Consider another one: If all else fails, explore other financial institutions that will cooperate with you for your home loan needs.

Tips for Finding the Best Home Insurance Online

Here are some vital tips to incorporate for finding the right home insurance plan:

  1. Compare Home Insurance Plans

    You can start the home insurance buying process by visiting Policybazaar.com. Here, you can compare home insurance quotes from reputable insurance companies in India based on your requirements.

  2. Know Your Coverage Needs

    You need to examine what aspects of your property you want to cover, such as the structure and its contents. For instance, if you are a tenant, you must buy only content cover and skip the building structure coverage.

  3. Know the Financial Strength of the Insurer

    Check the financial stability of the shortlisted insurers and their claim settlement ratio to get a fair idea of how the company works.

  4. Check Customer Reviews

    Read customer reviews on the insurer's website and related social media platforms for better insights into their service quality and customer experiences. Choose an insurer and a policy that aligns with your requirements & budget.

  5. Choose the Right Sum Insured

    Calculate the appropriate sum insured based on your property's size and the value of your belongings. Moreover, take advantage of the add-ons for extended coverage at the most nominal premium.

Final Call!

Home insurance is not mandatory for home loan borrowers unless specified by a financial institution's internal policies. However, having suitable home insurance can protect your property from various risks. It is essential to compare policies to find the right coverage that suits all your needs & gives financial security against unexpected events.

Written By: PolicyBazaar - Updated: 22 September 2023
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
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Reviews & Ratings

4.4 / 5 (Based on 120 Reviews)
(Showing Newest 10 reviews)
Virendra
Bokaro, July 26, 2022
Coverage for natural calamity
I was looking for an insurance policy that provides me coverage for natural calamity. Since my house is located near a river and it floods my area in the rainy season. So i went on the Policybazaar website and particularly look for this coverage found the exact plan that provides this coverage.
Sunil
Bilaspur, July 26, 2022
Premium Calculation
I was looking for a home insurance policy online. I stumblled upon the Policybazaar website and it is one of the best online platforms to purchase home insurance policy. I learned about the insurance plan i wanted to purchase and after choosing the plan and add ons i could calculate the premium using their online premium calculator. Thanks Policybazaar.
Manish
Bikaner, July 26, 2022
Natural Calamity cover
I have recently purchased a flat and wanted to cover it with a home insurance policy. I was aware of the Policybazaar website so i thought i should give it a try. I went on their website and as i wanted to cover my flat with a natural calamity cover specifically i searched for it and without wasting a minute it showed me the natural calamity coverage.
Mohit
Amritsar, July 26, 2022
Enough coverage
I was looking for a home insurance plan online. I was fed up as i have to visit different websites to look for a single suitable insurance plan. However, i stumbbled upon Policybazaar website where i was able to find the right insurance plan that could provide me enough coverage.
Sahil
Bareilly, July 26, 2022
Nice customer service
I wanted to purchase a home insurance policy and a friend of mine suggested to purchase it from Policybazaar. I bought the policy and after that i had a confusion regarding exclusions so i called up Policybazaar customer care and they cleared out the confusion and i loved their customer service.
Jitendra
Ajmer, July 26, 2022
Qiuck claim
I purchased a home insurance policy recently. However, due to a natural calamity, my house was damaged as the pressure of the water because of flood broke the enterance door of my house. But the insurance plan that i bought got me covered and i as able to get the quickest claim possible.
Prashant
Delhi, July 26, 2022
Natural calamities covered
I bought a home insurance policy recently. As i live near a river and in the rainy season, my area gets flooded so in order to protect my house and its contents, i purchased the insurance to get coverage for such natual calamities and i am tension free now.
Sharad
Kolkata, July 26, 2022
Wide coverage
The home insurance plan that i purchased from policybazaar's website is a great plan that provides me coverage for not only the structure but also cover several expensive content of the home such as paintings, mobile phones, laptops, television, etc.
Ravi
Ahmedabad, July 26, 2022
Suitable insurance plan
I purchased the group health insurance policy from Policybazaar website. First of all, i did not have to wander much online while lookig for a home insurance plan that fits my requirement and i found the suitbale home insurance plan by comparing different plans on the website.
Yashashvi
Amritsar, June 09, 2022
Natural calamities covered
I bought a home insurance policy recently. As i live near a river and in the rainy season, my area gets flooded so in order to protect my house and its contents, i purchased the insurance to get coverage for such natual calamities and i am tension-free now.
  • Disclaimers+

    #Savings of 28% are based on the comparison between the highest and lowest premiums for a pucca building with sum insured of >₹ 1 crore at Delhi, for property age less than 5 years and policy term of 11 years.

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