Home insurance and home loan insurance: what you need

3.14.1 What is home insurance in India?

Home insurance in India is a policy that pays you for physical loss or damage to your flat’s building, its contents, or both. The Insurance Regulatory and Development Authority of India (IRDAI) set a standard product for this called Bharat Griha Raksha. IRDAI’s guidelines, ref IRDA/NL/GDL/MISC/004/01/2021, dated 4 January 2021, introduced it with effect from 1 April 2021. Every general insurer that sells fire and allied perils cover for a dwelling must offer this standard wording, though each insurer can add its own optional covers on top. The policy has two parts you can buy together or separately: Home Building Cover and Home Contents Cover. Clause B of the standard policy wording lists the insured events: fire, explosion or implosion, lightning, earthquake and other convulsions of nature, storm, cyclone, flood and inundation, subsidence and landslide, and bush or forest fire. The policy excludes some causes within each event, such as damage from normal cracking or defective construction under the subsidence cover.

If you buy both Home Building Cover and Home Contents Cover, the policy gives a built-in cover for general contents. This equals 20% of the Home Building sum insured, up to a maximum of ₹10 lakh, at no extra cost. Valuable contents, such as jewellery, need a separate optional cover. This is a different product from the title or possession documents for your flat.

Part of Bharat Griha Raksha	What it covers	Source
Home Building Cover	The structure of your flat, as defined in the policy	Clause C
Home Contents Cover	General and valuable contents inside your home	Clause D
Built-in contents cover	20% of Home Building sum insured, up to ₹10 lakh, when both covers are bought	Clause D(2)(b)
Insured events	Fire, explosion, lightning, earthquake, storm/flood, subsidence/landslide, bush/forest fire	Clause B

3.14.2 What is home loan insurance, and how is it different from home insurance?

Home loan insurance is a life insurance product, not a property insurance product. It is usually a credit-linked group term or life policy that a lender sells alongside the loan. If you die during the loan tenure, the policy pays the outstanding loan amount, so your family does not inherit that debt. This is different from Bharat Griha Raksha, which pays for damage to the building or contents, not for your life. A lender can also offer a “loan protection” cover for job loss or disability, which is again a different product from building and contents insurance. Sachi did not find an IRDAI or RBI source, opened this session, that uses one fixed name for every lender’s version of this cover, so read the product name on your own sanction letter carefully.

Home loan insurance does not replace home insurance, and home insurance does not replace home loan insurance. A flat with a fire insurance claim paid in full can still leave an unpaid loan if the borrower dies with no life cover. A borrower with life cover but no building insurance has a loan paid off on death, but no cover if the flat burns down while they are alive. HDFC Bank’s page on home loans states, in its FAQ “Is taking home loan insurance mandatory?”: “No. Housing loan insurance is not mandatory.” The same FAQ adds: “However, it is advisable that you buy insurance for protection against any unforeseeable circumstances.” The page does not use the word mandatory anywhere for property or fire insurance on the flat itself.

Point	Home insurance (Bharat Griha Raksha)	Home loan insurance
What it is	Property insurance	Life insurance, usually credit-linked
What triggers a payout	Fire, flood, earthquake and other listed perils	Your death during the loan tenure (cover varies by product)
Who it pays	You, for the loss (Home Building or Home Contents Cover)	Usually the lender, to close the loan
Mandatory for a home loan?	Not an IRDAI product condition for the loan	HDFC Bank’s page: “not mandatory” for its home loan
Premium	Set by sum insured and perils chosen	Set by loan amount, tenure and your age/health

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3.14.3 Can a bank force you to buy home loan insurance?

Based on what HDFC Bank’s own page says, no, not at that bank. The FAQ states plainly that “housing loan insurance is not mandatory,” while also recommending it. Sachi did not find, opened this session, a page on this topic from the Reserve Bank of India (RBI) or IRDAI that states a general rule for every bank. The RBI’s own master direction pages on commercial bank lending and on responsible business conduct returned a bot-check page on IRDAI and RBI document servers during this research, so Sachi could not quote their exact wording on insurance bundling for this guide. Treat this as a gap, not a confirmation either way. Ask your own lender for its policy in writing before you sign the loan agreement.

What you can check and ask for, with your own lender:

1. Ask in writing whether home loan insurance is mandatory for your loan, and get the answer in the sanction letter.
2. If it is offered, ask whether you can choose a different insurer or decline the cover.
3. Check whether a single-premium policy was added to your loan principal. This raises your EMI and the interest you pay on that premium.
4. Compare the cover amount in the loan insurance policy with your outstanding loan balance, not the original loan amount.
5. Read the policy document, and also the sales brochure, for the exclusions and the death benefit formula.

3.14.4 Does the lender require property insurance on the mortgaged flat?

HDFC Bank’s own home loans page does not state a requirement to insure the mortgaged property. Sachi checked this page, and the only insurance item in its FAQs is “home loan insurance,” addressed above. The page’s Security section only says that “security of the loan would generally be security interest on the property being financed,” with no mention of a fire or property insurance condition. This is HDFC Bank’s own published term, checked on 12 October 2026, and it can differ from what is written in your individual sanction letter or loan agreement. The home loan sanction letter guide explains how to read the special conditions in your own sanction letter, where a lender could add a property insurance clause for your specific loan. Ask your lender directly, and read the loan agreement, rather than assume either way from a general bank webpage.

3.14.5 Who insures the building of an apartment, and what does your own policy cover?

The structure and common areas of an apartment building can be insured by the association of apartment owners, through its Manager or Board of Managers, not by each flat owner alone. Section 21 of the Karnataka Apartment Ownership Act, 1972 covers this. It states that the Manager or Board of Managers “shall have the authority to, and shall obtain insurance for the property against loss or damage by fire and such other hazards”, when this is “required by the Declaration or the bye-laws or by a majority of the apartment owners, or at the request of a mortgagee having a first mortgage covering an apartment.” So this building-wide insurance is not automatic. It depends on the deed of declaration, the bye-laws, a majority vote, or a mortgagee’s request. The premium for this cover is a common expense, paid through maintenance charges, not an extra bill to one owner.

Section 21(3) also protects your own choice: this building-wide cover is “without prejudice to the right of each apartment owner to insure his own apartment for his benefit.” So even where the association insures the building, you can still buy your own Bharat Griha Raksha policy for your flat and its contents. Sachi’s reading: in a new project, check whether the association has formed and adopted bye-laws that require this insurance, since a newly handed-over building may not have this in place yet. Until then, your own home insurance is the only cover on your flat.

3.14.6 Can I claim home insurance or home loan insurance premium in my income tax?

Life insurance premium, including the life cover inside home loan insurance, can qualify for a deduction under section 80C of the Income-tax Act, 1961. The Income Tax Department’s own e-filing portal lists “Life Insurance Premium” among the payments eligible under section 80C. This applies only under the old tax regime, and 80C shares one combined limit of ₹1,50,000 with provident fund and other listed items. Property or fire insurance premium, such as your Bharat Griha Raksha premium, is not named under 80C or 80D on this page. Section 80D covers only health insurance premium and preventive check-ups. The 1961 Act is due to be replaced. The portal states payments can be made “under the existing Income-tax Act, 1961 for dues up to FY 2025-26” and “under the Income-tax Act, 2025 for Tax Year 2026-27 onwards.” Sachi did not find the exact section in the 2025 Act that replaces 80C, so check your return form or a tax professional for FY 2026-27.

Premium	Section	What the Income Tax Department’s page says
Life insurance (including life cover in home loan insurance)	80C of the 1961 Act	Listed as an eligible 80C payment, old regime only, shared ₹1,50,000 limit
Health insurance	80D of the 1961 Act	Listed, with preventive check-ups and senior citizen medical costs
Home or fire insurance (Bharat Griha Raksha)	Not named under 80C or 80D	Not listed under either section on the page Sachi checked

3.14.7 What should a new-flat buyer check at possession, and what are the red flags?

At possession, buy your own home insurance and separately confirm the status of any home loan insurance in your file. Treat these as two separate purchases with two separate papers, even if one bank sold both to you on the same day. Check your Home Building sum insured against the actual rebuild cost of your flat, not the price you paid, since land value is not part of what Bharat Griha Raksha rebuilds. Check your Home Contents sum insured separately if you want cover above the built-in 20% limit. Do this at the same time you collect your possession letter and the occupancy certificate copy, so the flat is insured from the day you hold the keys, and not left uncovered while you move in and furnish it.

1. Ask the builder or bank in writing whether a home loan insurance premium was added to your loan amount, and get the exact amount.
2. Check that you gave explicit, signed consent for that premium, separate from your loan application signature.
3. Check the home loan insurance cover amount against your current outstanding loan, since a flat cover amount that does not reduce as you repay can be a mismatch.
4. Check the home loan insurance end date against your loan’s end date. A policy that ends before the loan does leaves you without cover for the remaining years.
5. Buy or renew your own Bharat Griha Raksha policy for the building and contents, and keep the policy document with your sale deed and possession papers.

Three red flags to watch for: a single-premium loan insurance policy added to the loan without your clear, separate consent; a home loan insurance cover that ends years before the loan itself; and a cover amount fixed at the original loan amount instead of reducing with your outstanding balance. If you see any of these, ask the lender for the policy document and the premium break-up before you sign.

Check	Where to find it	Red flag
Loan insurance added to principal	Sanction letter, loan statement	No separate signed consent for the premium
Cover amount vs outstanding loan	Loan insurance policy schedule	Cover amount fixed, not reducing with the loan
Cover end date vs loan tenure	Loan insurance policy schedule	Cover ends before the loan does
Home insurance sum insured	Your own Bharat Griha Raksha policy	Sum insured set at purchase price, not rebuild cost

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3.14.8 Does this apply if I buy a resale flat?

Yes, for home insurance. A resale flat still needs its own Bharat Griha Raksha or similar policy, and you should check whether the seller’s existing policy transfers to you or needs a fresh proposal in your name. A fresh proposal is the safer choice, since a transferred policy can carry old sum-insured figures that do not match the flat’s current rebuild cost or your own contents. For home loan insurance, a resale buyer taking a fresh loan goes through the same checks as a new-flat buyer: ask in writing whether it is mandatory, check your own signed consent for any premium, and compare the cover amount with your outstanding loan, not the original sanctioned amount. Resale buying guides are coming soon on Sachi. For now, use the new-flat checks above, and confirm each point in writing with your own lender and insurer before you sign anything.

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