Insurance When You Buy a Home

Purchasing a home is likely the largest financial transaction of your life. The excitement of getting the keys can make it easy to overlook the insurance layer that protects that investment. Getting home insurance right means understanding what the bank requires, what genuinely guards your asset, and what is unnecessary.

Add: Home Structure Insurance

A home structure or building insurance policy covers the physical structure against fire, earthquake, flood, cyclone, and other perils listed under IRDAI's standard fire and special perils policy. If you have taken a home loan, many lenders require this cover. Even if yours does not, the structure is too valuable to leave uninsured. The insured value should reflect the rebuilding cost (cost of construction per square foot), not the market price of the property.

Add: Home Contents Insurance

Structure insurance does not cover furniture, appliances, electronics, jewellery, or clothing. A separate contents policy fills this gap. Cover can be on a reinstatement basis (new for old) or indemnity basis (depreciated value) — the former is preferable though slightly more expensive. Budget around ₹3,000–8,000 per year for ₹10–20 lakh of contents cover.

Add: Personal Liability Cover

If a visitor slips and gets injured on your property, or if a pipe burst floods your downstairs neighbour, you could face legal liability. A householder's liability rider or standalone personal liability cover protects against third-party bodily injury and property damage claims. This is underused in India but increasingly important in apartment buildings.

Drop: Mortgage Reducing Term Assurance (MRTA) Sold by the Bank

Banks often bundle an MRTA — a decreasing term plan — with home loans. The premium is high, the cover decreases as your loan reduces, and the bank (not your family) is typically the beneficiary. A standalone level term plan of equivalent or higher sum assured is almost always cheaper and gives your family far more flexibility. Do not buy the bank's bundled product without comparing alternatives.

Resize: Your Life Cover to Match the Loan Liability

Your existing term cover may not account for the new home loan EMI. Ensure your total life cover is large enough so your family can repay the loan and still have income replacement. If a ₹60 lakh loan pushes your coverage gap, adding a term top-up is straightforward and inexpensive.

Consider: Tenant vs Owner Coverage

If you are renting out a portion of the property, check whether your home policy extends to tenant-occupied areas. Some policies restrict coverage when a third party occupies part of the premises; a landlord insurance endorsement may be necessary.

Conclusion

A new home demands a new insurance review: add structure and contents cover, choose a term plan over the bank's bundled MRTA, and update your life cover to include the loan liability. To compare home insurance options and find the right term plan without being pushed into a bank-tied product, speak with a trusted advisor on TruePolicy.