Is it mandatory to take general insurance after taking home loan from SBI ?

POSTED BY arnav_chak ON October 30, 2013 2:47 pm ONE COMMENT

Hi,

Getting a home loan sanctioned from SBI took me 4 complete months and the biggest reason behind it were the loan officers because none of them know the whole process.Around 16 Oct I received a letter stating that SBI has yet not received any General Insurance documents against my loan and if not submitted within ten days from the receipt of letter then an appropriate long term insurance will be assigned to my loan account and the premium will be deducted from my loan account.

Throughout the whole 4 months they never mentioned anything about general insurance rather they always mentioned about life insurance to be assigned in banks name.After the receipt of the earlier mentioned letter I went to the RACPC office on 19 Oct and as advised by bank authorities wrote a letter mentioning about the life insurance assignment to banks name as I didnt know anything about general insurance terms.

No further correspondence made to me after that and now they have added an amount of 17,747 to loan amount as a one time premium of general insurance for my loan term of 27  years.After this  I checked up with General Insurance Corporation of India and they said that general insurance for home cannot be covered for more than 10  years at one time and for loan of Rs.25,00,000 for the tenure of 10 years is Rs. 5618.

Now how could SBI general, cover my property for more than 10 years?

And why there is such huge difference between premiums of both the companies?

Please help as I am totally confused and perturbed.

One reply on this article “Is it mandatory to take general insurance after taking home loan from SBI ?”

  1. Did you check the documents and does it have 27 yrs of tenure ? It might happen that its not for that much tenure and SBI officials just said so ! .

    I suggest now file a RTI for this against SBI and ask for all your questions . Note that a lot of banks do not have any compulsion on any kind of insurance (life or general) , ICICI and HDFC are one of them . SBI might say that general insurance is mandatory , but that might be just officials words and not SBI .

    So better file a RTI and ask officialy whats the rule .

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