Many people dream of owning a home. However, rising property costs make owning or building a home unaffordable for many without a mortgage. A financial institution may lend money at a specified interest rate to people who may be willing to take a home loan.
Now, some financial institutes may push homeowners to purchase a home insurance policy. Some may even say that it is mandatory to buy house insurance if you need a home loan. Is it true? Let’s find out.
Is home insurance mandatory in India?
Both IRDAI and RBI have not made home insurance mandatory for any person who has a home loan or is planning to apply for one. Moreover, financial institutions also cannot force borrowers to purchase home insurance under this misunderstanding. You can, visit the official website of IRDAI for further details. However, some important points that you should consider –
- A financial institution may need home insurance with a home loan according to its internal criteria. They cannot claim that the Reserve Bank of India (RBI) or the Insurance Regulatory and Development Authority of India (IRDAI) have issued such a rule. *
- A financial institution cannot force home loan borrowers to buy home insurance from them even if it requires it. Homeowners can choose any insurer and policy. *
- Do not purchase home insurance and home loan from the same financial institute. It is best to compare insurance from multiple insurers to find the best fit. This may assist you in finding the right policy that has a lower premium. *
Is your bank pressuring you to buy home insurance?
You can purchase home insurance from any licensed insurer. But if your bank is forcing you to buy home insurance from them, then check if their internal policy requires home insurance for home loans. If their internal policy requires one, then you must:
- Compare a few other home insurance policy premiums and coverage offerings with what your bank is offering. *
- You may choose to go with your bank’s offer if all other financial institutions seem to be offering you a home insurance premium at a slightly higher rate. *
- You can decline the home insurance quote from your bank if their premium is substantially more than most other insurers. You may even remind them about the RBI and IRDAI guidelines. *
- If your bank official refuses to budge, you can complain to the management. *
- If the bank still rejects it, go ahead and get your home loan from another financial institution. *
Tips for finding the best home insurance policy online
The following tips may assist you in selecting the best coverage when looking to purchase home insurance:
- Select a reputable insurance company. Ask family and friends for suggestions. *
- Compare various home insurance policies by features, pricing, coverage, and more. *
- Ask insurance companies for premium quotations. You can check the premium for any policy online, too, by using any home insurance calculator. *
- Choose your house insurance coverage. Most insurers offer house insurance choices. One policy may cover a property’s structure, while the other may cover the structure as well as its contents. *
- Check shortlisted companies’ financial soundness and claim settlement ratios. *
- Choose a firm with a high claim settlement rate. Their website has consumer reviews.
- Choose a home insurance provider that meets your needs and budget. *
- Choose the proper sum insured. Consider your home’s entire area and its contents’ approximate value. *
- Fill out and pay for the online application. Riders and add-ons extend the policy’s coverage. *
To conclude, unless a financial institution requires it, homeowners do not need home insurance with a home loan. However, home insurance can protect your property from natural disasters, theft, fire, and other risks. A decent house insurance coverage protects the structure and its contents, protecting you against financial losses. *
* Standard T&C Apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.