Is property insurance compulsory for home loans

POSTED BY Bharath ON August 20, 2013 11:25 am COMMENTS (3)

I am availing a home loan from SBI(around 70lacs) for an apartment due to be delivered 3 years from now.I am told by the agent that buying a property insurance from SBI is compulsory.While i understand the need for property insurance,and i am keen to buy one;I want to know if the insurance has to be bought from SBI or from any other reputed insurance provider(like New India).Can you please advice me on the best insurance provider with a good balance of claims/settlements ratio and an economic premium

Thanks in advance

3 replies on this article “Is property insurance compulsory for home loans”

  1. vijay says:

    it’s not necessary to take property ins. to avail home loan. I have a home loan from HDFC. Two advisers gave contradictory statements. At the end, since I was only taking 40% of the home value as loan, I opted not to take the insurance and it worked just fine.

  2. Ashish Garg says:

    Hi,

    As far as I understand, it is not mandatory to take insurance from the lender company but it is wiser to take a term insurance to cover the loan amount. So in case of any unfortunate event, the loan can be paid through term insurance. Most of the lenders try to push mortgage insurance to borrowers but that’s costlier and is only cover the loan amount on reducing basis. They add the premium into your EMI and keep taking the same every month.

    Other thing is Home insurance, which is not at all mandatory, but again better to take if you have taken the possession of your house. Before possession, its builder’s responsibility. Once the possession is taken, go for a comprehensive home insurance from any general insurance company you feel comfortable with. Include your house structure and valuables against fire, theft etc.

    I have taken a home loan and have taken a Life Insurance Term plan to cover the loan amount (apart from present term insurance policy for me).

    Ashish

  3. Raja says:

    Hey even me too had forced to take SBI HL insurance around ₹50,000 from SBI LIFE against my home loan of ₹27,93,000.

    At that time I thought instead of taking outside, it could help me in maintaining a good relationship with Banking Manager of SBI for future concerns. So I had taken without any second thought.

    As per the below youtube link it’s not mandatory to take insurance from SBI LIFE for sure..!
    http://www.google.co.in/url?sa=t&rct=j&q=sbi%20home%20loan%20insurance%20mandatory&source=web&cd=1&cad=rja&ved=0CCkQtwIwAA&url=http%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DPjfjgXoTJbk&ei=DRQTUs-nJsGt2QXUuoCYCQ&usg=AFQjCNGF9tQu2RyQmYM9YlybPYVQ6lB4DQ

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