Home (Property) Insurance vs Home Loan Insurance - Hindi - YouTube

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Namashkar, my name is Mukul and welcome to Asset Yogi

where we unlock the knowledge of finance rather locking it

I made a detailed video on home loan insurance earlier

In that, we saw that home loan insurance and home insurance are not the same

Home insurance is basically a property insurance

So in this video, we are going to see the difference between these two

When which insurance is used, which insurance is mandatory?

Property insurance is mandatory in some loans and you have to buy that

We'll see all these points in detail and what is the difference between these two

Watch this video till the end so that you don't miss any point

Let's switch to the blackboard

Let's understand the difference between property insurance and home loan insurance

If you buy insurance for your house, it is home insurance and if you buy insurance for any property, it is property insurance

These 2 are totally different

We'll understand these through an example but first, let's understand the concept

In property insurance, you get protection on the building structure

and on the items inside your property like furniture, electronic and consumer goods, or jewellery

So the structure and items inside the property are covered in property insurance

In home loan insurance, you get insurance for home loan only

If by chance, the borrower dies then the insurance company will pay the home loan

So in property insurance, in what scenarios do you get cover?

If there is fire, robbery

If items get destroyed due to water seepage, any loss/damage due to terrorism

Riots, natural disasters like earthquakes, floods, cyclones, storms

You get property insurance against these kinds of manmade or natural risks

Whereas in home loan insurance, you get cover against the untimely death of the borrower

What is the term of the policy?

You get property insurance for up to 10 years

Some banks may give for 3 or 5 years and some may give for 10 years

Home loan insurance is basically on the remaining tenure of the home loan

Let's say you borrowed a home loan for 20 years

If you bought a home loan insurance in the starting, it will last for 20 years

If in between the borrower dies, at that time the insurance will terminate and the home loan will be paid

What are the options in property insurance?

Either you can take insurance for only structure or you can take for only content

Content means all the electronic or consumer goods with jewellery and furniture that we discussed here

Or you can take insurance for both and the premium will be decided according to that

In home loan insurance, you have 2 options

Either you can take the reducing cover option in which maximum reducing cover is given

or you can take fixed cover as well

If I'll explain this with an example, let's say you took a home loan of Rs 40 lakhs in reducing cover

And if the tenure was for 20 years

then after 10 years, let's say the remaining loan is Rs 27 lakhs

Then the outstanding amount will be covered and the payment of Rs 27 lakhs will be done

But on the fixed cover, if you took cover on Rs 40 lakhs

So the payment will be Rs 40 lakhs even after 10 years

So in fixed cover, the amount is fixed

Whenever the borrower dies within the loan tenure, this amount is fixed

But its premium is high, even double the reducing cover

Thats why most of the people go with reducing cover

Now if we talk about the sum assured in property insurance, then how it is calculated?

If you are going for the insurance of the structure, the insurance is done according to the construction cost

That means, let's say the build-up area is 1000 sq. ft.

This is multiplied by the construction cost

The cost coming out is around Rs 1000 per sq. ft. in your city

So the sum assured will be Rs 10 lakhs

We're talking about only the structure. So the sum assured is Rs 10 lakhs for the structure

Similarly, current market value is considered in the case of content

i.e, after the depreciation

So the bank estimates the current value of your consumer goods and jewellery

If your products are 4-5 years old

then the bank can consider the value as half or 40%

So keep this in mind as well

that you'll not get the same value at which you bought that particular item and you'll only get its current value

So you don't get depreciation in insurance

Now if we talk about home loan insurance

as we saw in reducing cover, there was an outstanding loan

it is equal to the amount remaining and in fixed cover,

it is fixed and equal to the total home loan amount and that is the sum assured

Who can buy property insurance?

The owner of the property can buy it whether an individual or a company or any society

There are many societies like the Residents Welfare Association, Cooperative Group Housing Society

In Cooperative Group Housing Society, the society is the owner of the overall land

So society can buy property insurance

In home loan insurance, let's say if there are 2 borrowers then that insurance is on both

The total borrowers buy the home loan insurance

Is it mandatory or not?

Firstly, property insurance is not mandatory by law but if you take a loan against property,

In that case, the bank keep it mandatory

Otherwise, there is no compulsion for you

Home loan insurance is not mandatory but many banks club it and sell it

Whenever you'll buy a home loan, many banks will insist you to buy the home loan insurance as well

I already made a detailed video on home loan insurance

If you haven't watched it then do watch it

because in that, I discussed the eligibility requirements and features related to home loan insurance

and if you don't want to buy home loan insurance, in that case

I discussed the best alternative for you

How you can avoid the home loan insurance

I discussed that as well so do watch that video

Now let's talk about the exclusions of property insurance

In what cases you don't get property insurance

Firstly, you don't get exclusions on land or plot value

You only get it on the structure of the building

So you'll get the insurance on the building cost or on the market value of the content

By chance, if some cash is stolen from your house then it doesn't cover the loss of cash in this insurance

Loss and damage caused by normal wear and tear or the depreciation of the content is also not covered

Under construction property is not covered in property insurance

Damage and loss due to war, nuclear war and invasion

We discussed many man-made and natural risks but war, nuclear war and invasion are not included in that

So keep this in mind

Many banks don't provide insurance for the building older than 30 years

So clear this out with your bank that if the building is old, then will the insurance cover it

i.e, will the insurance company ensure it or not

If the property is vacant for more than 30 days and you didn't inform the insurance company

In such cases, there is a clause of many insurance companies

That if any damage happens when the property is vacant, they will not cover in the insurance

So read this clause carefully

If you stay with your relatives and your house is vacant

or you stay with your children in another country

then read this clause carefully and check whether the insurance will be applicable in that case or not

It is not there in all the banks and insurance companies but some companies insist on it

So I think I covered all the major points related to the property insurance

and we also saw the comparison with the home loan insurance

I tried to cover all the major points in this video

But still, if any point was missing or you want to add something then you can comment down below

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Till then keep learning, keep earning, and stay happy.