Home insurance

I have been given possession of a flat in sec 82 Faridabad. The flat is on loan & for registry, builder is asking for an NOC from the loan providing bank. The bank is asking for property insurance without which they will not give NOC. I have a 2145 sq ft area & my loan is for 20yrs commencing from May 2008.
I plan to sell the flat in next few yrs. Pl advice which is the best option for insurance & if it is mandatory.

Thanks

Saraswati

Home Insurance is not a mandatory product while availing a home loan, but sometimes banks/financial institutions take your consent in the initial conditions(or sanction letter) itself that the property will be insured properly. Home insurance and home loan insurance are not mandatory as far as home loan is concerned but many banks have tie up with particular insurance companies, so they can force you to take policy from them. Though it is not mandatory but it is advised to take a home insurance to cover from unseen risk.
There is not much variety available when it comes to property insurance. For a structure specific cover, the premium could range between Rs 50-70 per Lac of the sum insured. In your case, suppose the sum insured (built up area in sq ft(2145) x cost of construction per sq ft (Rs 2000)) is Rs 42.9 Lac, you will have to pay an annual premium of Rs 2574(at Rs 60/Lac).

Home Insurance is not a mandatory product while availing a home loan, but sometimes banks/financial institutions take your consent in the initial conditions(or sanction letter) itself that the property will be insured properly. Home insurance and home loan insurance are not mandatory as far as home loan is concerned but many banks have tie up with particular insurance companies, so they can force you to take policy from them. Though it is not mandatory but it is advised to take a home insurance to cover from unseen risk.
There is not much variety available when it comes to property insurance. For a structure specific cover, the premium could range between Rs 50-70 per Lac of the sum insured. In your case, suppose the sum insured (built up area in sq ft(2145) x cost of construction per sq ft (Rs 2000)) is Rs 42.9 Lac, you will have to pay an annual premium of Rs 2574(at Rs 60/Lac).

Hi Saraswati,

There are typically 2 kinds of insurance that a bank might ask for along with a Home Loan. One is Home Insurance and another is job loss cover or loan insurance. Both of them are not compulsory. A Home Insurance is a type of property insurance that is used to protect an individual’s house against damages to the house or to possessions in the house. Job loss cover or loan insurance is where the EMI of the loan will be covered in case you lose your job or are unable to pay your EMI due to several reasons. This is a good cover to take, more so when you opt for a joint Home Loan. In case of a joint Home Loan, if one is incapacitated, the other borrower needn’t bear the burden of the loan.

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Cheers,
BB Expert