If you ask me, is property insurance mandatory for home loan as per RBI, I will say No. The property insurance with a home loan in India is not legally mandatory. The regulatory position is clear. Neither the Reserve Bank of India nor the Insurance Regulatory and Development Authority of India (IRDAI) requires a borrower to purchase a specific insurance policy simply as a condition for sanctioning a home loan.
Is Property Insurance Compulsory for Home Loan?
No. However, in practice, lenders may require or strongly encourage you to insure the property (or the loan) for their own risk mitigation.
Many banks view property insurance as a way to protect against damage to the asset (the property) and thereby safeguard the bank’s security interest.
While you are free to choose any insurer or even decline the policy, non-compliance may affect loan disbursement if the bank views it as a condition in its internal policy.
Essentially, buying property insurance is optional for you as the borrower, but not buying it may raise issues with loan processing because banks want to minimise their exposure.
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Is property insurance mandatory for home loan?
Nikhil
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2021-09-28T17:02:49+00:00 2021-09-28T18:35:58+00:00Comment
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