What I need to know about the home insurance before you take a mortgage loan


Everything you should make sure to do the best possible security for the home of your dreams

For those who have acquired residence through a mortgage loan, the insurance is compulsory. This is the so-called residential mortgage security and concerns the customer’s obligation to the bank to insure the property is mortgaged under the coverage requested by the bank concerned.

But that perhaps is not known to many is that, on the basis of Circular 462 of the Reserve Bank of India (issued on May 14, 2013), there is no compulsory insurance through the bank granting the loan. Everyone has the right to freely choose an insurance company or insurance agent sufficient insurance coverage to meet the specified in the loan contract.

For those who have previously insuring the property through the bank, they have the right in its contract renewal, change insurer and achieve cheaper premiums with the exact same coverage.

If we want to change company, they should take care to present to the bank the new insurance at least one month before the expiry of the old, ie before the “pull” the bank money from the bank account for renewal.
Those interested should watch some things such as to describe in detail the property that will insure accordance with what is stated in the permit (eg Which floor is, what apartment etc.), indicate properly the mortgagee and accepted the insured value of the property (ie reconstruction value) to avoid the risk.

For example, if a building is insured at a value less than the value of rebuilding, automatically in the case of damage operates the so-called proportional term. That is, if a building is worth for example 100,000 euros and insured for 50,000 euros, then in case of a loss of value eg 20,000 EUR, the beneficiary of insurance will receive 50% of the loss (10,000 euros). This is because the building was insured for 50% of the actual value of the reconstruction.

We should reiterate that each bank is obliged, according to the circular mentioned above, to grant any residence Insurance contract includes the coverage required by the loan agreement. The mandatory home insurance provided by the loan agreements usually requires the earthquake and fire coverage. The new contract we will provide the borrower should at least include this cover.The only condition that can put a bank is the solvency of the insurance company chosen by the borrower, and no other.

More generally, a good insurance residence program offers coverage for fire, fire from wood, lightning, smoke, earthquake, explosion, vehicle impact, aircraft fall, trees fall, branches, poles, terrorist actions, attitudes, strikes, riots and civil commotion.