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:
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.
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.
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.
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.
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.
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