02 September 2011
Home Insurance Facts for the Borrower of Home Loan
With the property rates so high and each flat going in crores of Indian Rupees the lenders do need the reassurance of the insurance cover to lend such huge amounts as home loans. Usually the borrower is not aware of this fact and only after finalizing the lending institution of home loan bank does this insurance policy crop up.
Since many home loan lending companies have tie up with insurance companies the customer may sometimes be taken for a ride. The borrower also may not be aware of all the facts and many times this insurance cover is forced upon the borrower due to no other option they have to purchase this insurance policy to insure their property and home and sometimes also life insurance to cover accidents and unexpected personal calamities.
The fact is that most companies only cover a part of the total cost of the flat. In case of the need arising to claim the insurance cover it becomes clear that only a small part of the total cost of the flat is covered. The cost of the construction is considered only, and the area rate is not considered, so you pay a premium to buy a flat in a posh locality and the insurance cover will only be of the amount your flat is being constructed with.
It is very important to go through the documents of insurance policies carefully but another fact is that the home loan lending company associate will not allow you to get into the details before and you will get the original documents of the insurance policy only after your home loan approval. After this you are committed and you already have to pay the premium in a single large amount or smaller monthly instalments which are paid along with your EMIs of your home loan.