Home insurance for under construction building

POSTED BY pankajgaud80 ON March 7, 2014 7:37 pm COMMENTS (10)


Can anybody guide me to buy the Home insurance for under construction building? As i have taken the loan from SBI and the home loan insurance is mandatory. Flat is under construction and I will get the possession by mar 2015.

Please tell me the cheap and best insurance provider

10 replies on this article “Home insurance for under construction building”

  1. Sagar says:


    As per my own experience, you can buy 1 year home insurance from bajaj allianz or whoever is ready to offer. In my case hdfc icici was not ready to insure under construction property, so i went for bajaj. So this costs around 1000 rs. for 22 lac sum assured. I saved 10 thousand.
    One should not be buying home insurance reason being, we dont see the need. How many home insurance claims really happen versus insurance taken? This is just a cross selling agenda of SBI and other nationalized banks. If they see a risk in giving loan to some property, that property has to be in black listed area. A property after all legal approvals is not that risky to buy. Imagine if they are making 10k per home loan, how much money they are making just by selling home insurance. It is as good as charging higher interest for 3-4 years term.

    1. Hi Sagar

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also


  2. Sagar says:

    Hi Pankaj,

    I am going through same process now. What i think we could do is buy a minimum term home insurance policy, that will save us a lot of money. e.g. SBI asking for 11208 for my home and if i go for one year policy with some other insurance provider its 1700. so i can save 9500.
    now the biggest question is no insurance company covers under construction property, so when to buy it without having hassles of sbi home loan disbursement.

  3. pankajgaud80 says:

    Hi Ashal/Raja,

    Thanks for your guidance. Yesterday I completed all the home loan documentation formalities at SBI RACPC. My experience was very good. SBI did not ask to buy any life insurance. For property insurance they only suggest that go for construction value only and it will start after the home registration/possession. So I purchased from SBI. One time premium is 7.8K.
    Thanks once again for your help 🙂

  4. ashalanshu says:

    Dear Pankaj, the property insurance ‘ll be one time affair linked with your loan term. Please cover the property for construction cost only. Why? Even in case of land slide, flood, earth quake or lightening etc. the basic piece of your land ‘ll remain there. It’s only the building which ‘ll brunt the fury of nature. So technically home insurance should be only for building cost which is your construction cost. Talk to RACPC guys with this logic and you ‘ll get success.



    1. pankajgaud80 says:

      Thanks a lot Ashal for your guidance

  5. Raja says:

    What Ashal means is property insurance if I’m not mistaken. What is the use of taking property insurance for an under construction building. Till the construction is complete and flat is handed over to you, it is the builders risk and liability. In case of any mishap, you will anyway not be able to claim anything since you havent got possession yet. So my view is to get property insurance based on construction cost only after you get possession.

    As far a loan insurance is concerned, it means taking a term cover for that amount. You can take it from SBI also and it will be cheaper than any home insurance product.

    I know many banks will force you to take a home insurance cover which includes life insurance and property insurance, but reality is, the property insurance part is useless till you get possession.

    1. pankajgaud80 says:

      Thanks Raja for your reply.

      You are right this for Property Insurance only. As per SBI home loan term and condition – “The house/flat shall be insured comprehensively for the market value covering fire, flood, Earthquake etc. in the joint names of the Bank and the borrower. Cost of the same shall be borne by the borrower” That is the reason I am looking for home insurance.

      My loan has been sanctioned and this coming Wednesday I am going to SBI RACPC branch for the documentation formalities. In welcome email they have recommended “SBI SMART SHIELD” For this i can tell to the bank that I have already one term insurance plan of 50L.

      But my concern is for property insurance. I am trying to find out what will be the annual premium range for this with different insurance website but none of them mentioned for under construction flat.
      Please guide me in this case

  6. ashalanshu says:

    Dear Pankaj, please purchase the insurance from SBI itself but purchase only for the construction cost not for the land. This ‘ll make it cheaper to you.



    1. pankajgaud80 says:

      Thanks Ashal

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