POSTED BY March 1, 2014 3:40 pm COMMENTS (4)ON
Recently got sanctioned a home loan from SBI. For insuring the loan, I have already assign my term plan in their favour. But again SBI is asking for a premium for insurance of house against flood, earthquake etc. And for that had asked the undersigned to bear the premium on the strength of some IRDA guidelines/circular.
Just wanted to know whether SBI can force for buying such a Insurance policy and charge premium from the undersigned. In my view it is a pure business risk of SBI and the cost towards it, if any will be borne by SBI himself and may be passed on to consumer in the form of appreciation in loan rate.On the one hand SBI is claiming lowest interest rate while on the other is extracting some unauthorised charges on the other.
Please guide us whether SBI can ask for compulsory insurance and if yes whether premium of such has to be borne by me. Please attach relevant IRDA/RBI circular on this matter
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4 replies on this article “Can SBI force Home Loan borrower to take House Insurance ?”
Dear Rahul, earth quake, land slide, flood, lightening.
Can you please elaborate on “natural calamities” generally involved in this type of insurance?
Dear Sanjeev, the house in question belongs to you. So you mean to say that if you are not opting for home loan, you ‘ll not opt for an insurance and bear the risk on your own?
SBI is asking for property insurance to cover it’s risk towards the property arising from natural calamities. As you are the owner, it’s your responsibility to cover that risk.
House Insurance could be mandatory. We suggest you check the terms and conditions for the same or insist on the copy of the circular. It could also be a good thing to opt for given that you have spent huge amounts on your house and if the house is destroyed due to natural calamities then it protects you and the bank both.
Home insurance could be availed as a good practice. It anyways would be your personal call.