Is Buying Home Insurance Mandatory To Avail a Home Loan? Things You Must Know

February 17, 2023
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Picture this: You are keen to buy a 1 BHK in Ghatkopar and in fact you have liked one house too. The next thing you do is approach a bank to check your eligibility, give all your documents to them and they guide you with the way forward. But, the financial provider also asks you to opt for their insurance policy and that your loan will not be processed without the same. What will you do?

The answer is: You are not obligated to buy the policy from the same financial institution.

Guidelines for Home Loans and Insurance

  • If a financial firm decides to make home insurance mandatory with a home loan, it will do so in accordance with its internal policies. The lender wants to be sure that in the event of death or any other mishap, the loan amount will still be repaid.
  • However, they cannot state that such a rule was approved by the RBI or IRDAI.
  • Insurance is mandatory for home loan buyers but which insurance to buy is completely the decision of the home buyer.
  • When buying a home insurance, check what premium your financial institution is offering and compare it with other home insurance policies from the market.
  • If your financial institution is charging a significantly higher premium than other insurers, you have every right to refuse to purchase insurance from them. You can also inform them of the RBI and IRDAI guidelines.
  • If your financial institution refuses to cooperate, we suggest you go for another loan provider.

How Do You Know Which Insurance Is Best for You?

When looking for home insurance, the following suggestions will assist you in selecting the best policy:

  • Do your research about the insurance companies in your area. We are living in an age where we have access to websites where you can compare policies, the premiums and benefits. Make use of that.
  • Speak to your family and friends who have purchased a home recently. They will be able to help you with their experience and how they purchased a policy that best suited their needs
  • Once you shortlist the companies, you need to examine their financial strength and claim settlement ratios. Always go with a company that has a high claim settlement ratio.
  • Check out their website for customer reviews to get a better idea.
  • Choose the appropriate sum insured. You must consider the total area of your home as well as the approximate value of your belongings. Don’t forget your own budget too
  • Once you find the policy that’s perfect for you, make the first payment, check if you need any additional services to ensure better coverage.

Having a home insurance can protect your property from any mishaps like fire, theft, natural disasters, man-made hazards and much more. A good home insurance policy covers not only the structure of a property, but also its contents, and protects you from unexpected financial setbacks. Also, if you are looking to purchase a home, get in touch with L&T Realty, one of the top real estate developers in India. Browse through the list of our exceptional residential projects like L&T Veridian and several more, and get in touch right away for more information!