Home Insurance in India: What It Covers, What It Costs, How to Claim

Your home loan is sanctioned, and along with the papers comes a form for an insurance policy, with the premium already added to the loan amount. Nobody explains what it covers. Separately, a friend in Bellandur tells you how the 2022 floods damaged ground-floor homes and cars across that stretch of the city, and you wonder whether anything you own is actually protected.

Home insurance in India is cheap, under-used and often confused with the loan cover banks sell. Here is what it does, what it costs and how to make a claim stick, as of November 2026.

Two things you can insure: the structure and what is inside

Every home policy splits into two parts.

• Building or structure cover: the walls, floors, roof, fixed fittings like plumbing, wiring, modular kitchen and built-in wardrobes. This pays to repair or rebuild.
• Contents cover: furniture, appliances, electronics, clothes and other movable items. Jewellery, art and silverware usually need a separate declaration and extra premium.

If you own a flat, you need both. If you rent, you only need contents cover, since the structure is the owner's concern.

One thing flat owners miss: your apartment association may already insure the building, including common areas, lifts and the structure. Ask for a copy of the association's policy. If it exists, check whether it covers individual flats or only common areas, and fill the gap with your own policy.

What a standard policy covers

In 2021 the insurance regulator, IRDAI, asked general insurers to offer a standard home policy called Bharat Griha Raksha. Since 2022 insurers can also sell their own versions, but most still offer it and it is a good benchmark. It covers loss or damage from:

• Fire, lightning, explosion
• Earthquake, flood, storm, cyclone, landslide and subsidence
• Riots, strikes, malicious damage and terrorism
• Bursting or overflowing of water tanks and pipes
• Impact damage, such as a vehicle hitting the building
• Theft, but only within 7 days of one of the events above and caused by it

That last point surprises people. A standard policy does not cover ordinary burglary. If you want that, look for a burglary add-on or a policy that includes it.

The standard policy also gives you automatic contents cover equal to 20% of the building sum insured, up to ₹10 lakh, without listing items, when you take building cover. It can also pay rent for alternative accommodation if your home becomes unlivable after an insured event.

What it does not cover

• Wear and tear, gradual seepage and poor maintenance
• Damage that existed before the policy started
• Deliberate damage by you
• Loss of cash, bullion and unset stones
• Your car in the basement (that is motor insurance)

How much cover to buy

Insure the building for what it would cost to rebuild, not for what you paid. Your ₹1.2 crore price includes land and location. Neither burns down. Insuring for market value means paying premium on value you could never claim.

A simple way to estimate: built-up area × current construction cost per sq ft. For a 1,500 sq ft built-up flat at about ₹2,800 per sq ft, that is about ₹42 lakh. Your insurer may have its own per sq ft rate, so ask.

Why under-insuring hurts

Most policies apply an 'average clause'. If you insure a ₹40 lakh rebuild cost for ₹20 lakh, the insurer treats you as 50% insured. A ₹2 lakh water damage claim pays ₹1 lakh. Some standard policies waive this if you declare the sum insured using the insurer's own rate, so read that section of the policy wording.

What it costs

Home insurance is one of the cheapest covers you can buy. For a building cover of ₹40 to ₹50 lakh on a flat in a city, quotes typically run into a few thousand rupees a year, with contents add-ons and burglary pushing it higher. Rates depend on the insurer, the city, the building's age and construction, and the add-ons you pick, so get two or three quotes.

Add 18% GST to the premium. The GST exemption from 22 September 2025 applies to individual life and health policies, not to home insurance.

Some insurers offer multi-year policies, which can work out cheaper per year and save you from forgetting a renewal.

The policy your bank pushes

At loan time, banks often offer two quite different products. Know which is which.

Home loan protection plan

This is life or credit cover, not home insurance. If the borrower dies, it repays the outstanding loan. The premium is often a single lump sum added to your loan, so you pay interest on it for the full tenure, and the cover usually shrinks as the loan does. A plain term insurance plan for the same amount is often cheaper and stays with you if you switch lenders. Neither RBI nor IRDAI makes this cover mandatory.

Property insurance

Many lenders do require the property to be insured, since it is their security. That is fair. What you are not obliged to do is buy it from the bank's partner insurer. You can usually buy a comparable policy elsewhere, name the bank as the loss payee, and submit a copy. Ask the bank to confirm in writing what cover it needs.

If the bank has already added a policy to your loan, check the cancellation terms. Most life policies have a free-look period after you receive the policy document, during which you can cancel for a refund.

How to make a claim

1. Prevent further damage. Shut off water or power, cover broken windows. Insurers expect reasonable steps.
2. Inform the insurer quickly. Call or use the app, note the claim number. Late intimation is a common reason for disputes.
3. Document everything. Photos and videos before you clean up. Keep damaged items until the surveyor sees them.
4. File a police complaint for theft, riot or malicious damage. You will need the FIR copy.
5. Meet the surveyor. For larger claims the insurer sends one to assess the loss. Walk them through each item.
6. Submit documents: claim form, policy copy, repair estimates, purchase bills for contents where you have them, FIR if relevant.
7. Review the settlement. Check deductions for depreciation and any average clause before you accept.

If the insurer delays or rejects without good reason, write to its grievance officer first. If you get no response within a month, or are unhappy with the reply, you can approach the Insurance Ombudsman for free.

Keep a simple folder now: purchase bills for big appliances, a phone video walking through each room, and a copy of your policy. It takes 20 minutes and makes any future claim far easier.

If you are buying a home and want a second opinion on loan and insurance offers, Skyros Estates can help you compare what lenders are proposing before you sign.