Is home insurance mandatory in India?

Posted on: Nov 22, 2024 | 3 mins | Written by: HDFC ERGO Team

Is home insurance mandatory in India?

Home insurance, property insurance or homeowner insurance is designed to protect your home against damage. In India, it isn’t necessary to have a home insurance policy compulsory by law though it is an essential policy that has to be taken. However, experts highly recommend buying one as it has an aspect that deals with uncertainties like natural disasters, fires, burglaries etc. and they are a threat to your most valued investment.

What is Home Insurance?

Home insurance or property insurance depends on an insurance policy that covers your home building structure as well as household goods/contents under a policy against loss from events like fire outbreaks, natural calamities, theft and the like. It also protects the members of the household against legal risks. There are two categories of coverage – building cover and content cover. Bharat Griha Raksha policy provided by the general insurance companies is amongst the most famous ones in India home insurance plans.

Is it Mandatory by Law?

Currently, the Indian government has not set building insurance as a mandatory requirement like motor vehicle insurance companies. Nonetheless, the banks or housing finance companies, through whom one avails a home loan, always insist on compulsory home insurance. According to various laws of housing financing companies, home loan borrowers are often bound to purchase at least a home insurance cover that is equivalent to the loan amount borrowed for the financing of the house.

Why Should You Buy It?

Although not compulsory, residents’ or property insurance is highly encouraged because, in the event of misfortune such as flood, fire, theft and the like which might harm your prized possession, compensation is provided. With property insurance, it is very easy to restore, reconstruct or replace your house at an insignificant cost in case of such events. It runs a gamut on household items also. However, if such events occur and you are without home insurance, then you are likely to pay a very steep price out of your pocket.

Conclusion

Finally, it can be suggested that home or property insurance is not mandatory under the existing Indian legislation. However, the banks would insist on building insurance where you are a home loan borrower that is at least the loan amount. However, it is always better to go for insurance for one’s valuable property even if it is not mandatory as it brings a lot of financial security against uncertainties regarding property as has been offered under the Bharat Griha Raksha policy.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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