SBI property insurance mandatory, when buying loan from them

POSTED BY Gaurav.007 ON July 26, 2012 12:21 pm COMMENTS (42)

Hello friends..
I have to go n sign the documentation for home loan…i called them to ask what i `m suppose to get along they said

– approx 5200 as stamduty for mortgage

– 6 blank cheques for security

– 1 blank cheque for property insurance ??? i told them i dont want property insurance..the building is under construction..but only 1 slab is remaining..even the under ground tank is done..possession is in march 13..i will jst be wasting the money..although they said it covers you against natural calamities ..but still i dont it mandatory ?? thats what SBI ppl said

– also they pushed me to go for some max gain suraksha insurance..its like some term insurance..incase something happens to me..they get de loan amount n family gets balance amount..again i didnt want it..since i already have a term insurance which is more than loan they attach the loan with insurance..

now i dont want to repeat my mistakes and hence dont want property insurance..pls throw some light..i `m dealing with SBI…thank u

42 replies on this article “SBI property insurance mandatory, when buying loan from them”

  1. Aniket Rastogi says:

    Hi Manish,
    I have recently taken loan from SBI. The loan amount is 74 lacs and the property cost is 99.25 lacs. The loan is sanctioned for 30 yrs but not yet disbursed. Now the SBI branch is forcing me to take a insurance for min. of 15 yrs or 30 yrs. Due to paucity of funds I am not willing to go for such a long term insurance. I would prefer to take insurance for 4-5 yrs now and once that expires will be in a position to take for the remaining period. On probing why is the insurance being provided for 15 yrs the branch people showed me a possible circular (authenticity questionable) from RBI mandating minimum insurance term as 15 years. Could you please confirm if this is the case or I can opt for insurance from some other General Insurance Company for a lessor tenure. Thanks in advance for your help.

    1. If its a general insurance for the home structure , then you can go for it because its for your home. The premium would not be very high and should be within your reach. Incase of SBI loans, I think its mandatory . You can still take from other insurer and give them the policy, but I suggest go with SBI itself as it will be faster, and premium different wont much worth hassle.

      But if its a home loan insurance (insurance to cover your home loan outstanding) , then just say NO, its not mandatory and its just being sold to you as a cross selling activity and for commissions.

      Read more on this here –


  2. manish says:

    i took 335000 loan from SBI on Nov2013 on the basis of allotment letterof Flat and bank has taken 28000 SBI Life Premia and amount and Total Loan Sanctioned 335000+28000=363000 which is mentioned in Sanction Letter and today i fully cleared my 335000 loan amount but bank told that u hav still Insurance amount Remaiing… to clear which is Rs.13000. Now my Qustion is it mandatory to pay remaining 13000 insurance amount however I already fully Paid my Loan amount and No due in loan account

  3. Sanjeev Y B says:


    I also recently encountered the situation similar to all how you faced. I have also opted for home loan through SBI and was forced to take the loan on insurance terms. They have deducted the insurance premium at the time of sanctioning the loan and informed that all the insurance related aspects are covered and there is nothing to worry about it till the loan amount is cleared. However recently i was also surprised to see that they have debited some amount from my home loan account towards Property insurance and without my knowledge. Now the question is there are lot of things that is going on about that it is not mandatory,etc. But i am looking for some information where in i can talk on legal terms. If any one can help me in providing me the details it will be of great help. If some one has got any information in the form of RBI guidelines or circular kindly help me in sharing it so that i can also approach the official concerned at SBI and put forth my matter and take them into task with this line of argument. However if we go to them without any proof they will make us fool and they interpret the english sentence in their own terms.


  4. kavitha says:


    Plz help me!

    I have applied home loan in sbi they asked me to put life insurance because my husband is not having pf account so they told that you should put life insurance its mandatory for you we both talked to them that we dont want but they didnt accept and made us to put life insurance.

    Is there any way to cancel our life insurance in SBI?

  5. shiva says:

    I have availed Home loan from RACPC Kormangla. On loan value of 40 Lacs ,they have charged me 30 K as one time premiuom for property insurance. Can you please suggest ways 1.) How to make them agree to part away with property insurance. 2.) Contact details for registring complaints for this mandotary insurance 3.) Or can we at max minimize the property insurance on sale valve instead of complete value.

    1. ram says:

      Hi we are facing the same issue with RACPC koramangala. How did you resolve this ? Did u manage to get your money back?

      1. nam says:

        I am facing same issue with RACPC Basavanagudi?
        Is this issue resolved? What did you do?

        1. Suresg says:

          Dear all
          I am also facing same problem at RACPC basavanagudi even though I told not required they said it is mandatory my reg is next week

          1. Rahul says:

            I am also facing the same issue in RACPC koramangala

      2. Adithya says:

        Same Here. Around 20k has been debited from my Loan account as Property insurance. From Racpc kormangla

    2. VijayKari says:

      Hi Even same wit my self, ( from RACPC koramangala) they debited me policy amount too. How to get cancel this policy ?

  6. Venkatamurali says:

    Hi Manish,
    I have applied for 20L Home loan with SBI with an agent from the builder. He has asked me to go for insurance. Then I said, few of my friends have not taken any insurance and I don’t want to go for it. Then, he said, that life insurance is optional but property insurance is mandatory. I am just confused now. Please let me know if this “Property insurance” is really mandatory or not, and if it is Mandatory, then what would be normal charges, and if the charges are high with SBI, can it take it from outside and give it to SBI? Please guide

    1. From what I know, incase of SBI , property insurance is mandatory, but that would not cost a lot. May be few thousands ! , you can take it from same guy or outside !

    2. Vivek rathod says:

      Life or propoerty or any other type of insurance is not mandatory with home loan. Ask the executive or manager to give u in writing that insurance is mandatory and then send that email to irda or bank consumer complaint cell

  7. suhasini says:

    3. Is Insurance mandatory ? What are charges for it ? Is there any workaround ? – My question answered below by bank agent, wanted to confirm whether it is true of fake

    1. Vivek rathod says:


  8. karryonmore says:

    Today visited SBI, Thane for submission of a demand note for disbursement. There is a big printed flex board of 3 feet x 4 feet displayed prominently within the RACPC – stating Property Insurance is compulsory.
    However, 80% completion of project or after possession is not mentioned over it. On probing, officer warned to stop further disbursement in want of a property insurance from ANY company on a construction value of a flat for 24 yrs (Loan tenure=25yrs; 1yr passed from Loan sanction & subsequent disbursement).
    Now what?

  9. karryonmore says:

    My Question is specific about the Home/Property Insurance policy which is under construction stage and expected to complete in next 2 years ( Registered Agreement possession commitment is of Dec-2016 by developer).

    Now, its an under construction building of 22 levels where a Home loan has been in force for all the construction linked payments to developer thru SBI since last 7-8months and developer claims to have completed 80% of work as per the construction plan mentioned in the agreement. Already assignment of a SBI life insurance term policy has been made by the First borrower; since the property will be co-owned by a married couple.

    Now, point is, SBI is asking to take a Home protection insurance policy, immediately.
    Q1- Whether such policy is mandatory?
    Q2- Since the property is still under construction and 2 more years to complete, there is no legal possession of a property and not ready so how can any insurance companies cover it for an individual?
    Q3- Since builder/developer is putting such a big investment is builder responsible for any earthquake or similar damage insurance to the lender or buyer?
    Q5- SBI had issued unilaterally a deducted for a property insurance policy without any info/consent, form filling from us, but later withdrawn on a complaint by reversing the deduction, debiting loan account for the Property insurance charges. How an insurance company can issue a policy without buyers application? ( We have not given any forms signed during loan sanction/processing). Also how can SBI pay on our behalf to SBI insurance company without our consent from a loan account which is meant for a Home loan purpose? If we/I refuse to buy any such policy till I get the peaceful possession from the developer, can SBI hold further disbursement to the developer on his demand letters thru borrowers/us?
    Because if builder doesnot receive payment to his demand within 15 days developer will charge for a penalty @ 24%.
    Q6- Since the property is still under construction at which value will it be insured? Market Value/Agreement Value/ Construction cost? Till what time? How to change it from construction value to Market value if its issued today on the basis of a construction cost?
    I hope my query is clear and descriptive to receive reply from experts.

    1. holeppa kale says:

      how did you get it reversed. Even Today I fought for this today they are arguing and defending that they will not reverse and they deducted that from my loan account. Is there any way to file a complaint against this, since they did without my consent

  10. ankit Gupta says:

    Thanks Ashal for your suggestion !!
    I have insured my property with National insurance at lowest premium for 15 years. I will surely be renewing the policy regardless of the loan is completed or not.

    And I noticed that SBI Gen Insurance’s premium is too much high compared to other PSU insurance cos. I would recommend everyone who are taking loan from SBI- strongly deny property insurance if you think premium is too high. moreover they add this amount in your loan amount so you end up paying very high amount for the SBI gen property insurance.

  11. Dear Ankit, you mean to say after repaying the loan, the risk of building ‘ll not be there & hence you ‘ll not cover your home for this risk? think over it.



  12. ankit Gupta says:

    They said that amount will be refunded in my loan account with in 5 days.

    When amount will be refunded, I have to insure my property again. Can You pls suggest me some good property insurance products. I have finalized Reliance and Bajaj Allianz.

    I will insure my home for 5 years. And then will renew the term if required (If my loan is not repaid till that time). This is my strategy.


  13. Dear Ankit, thanks for the update. Please keep us updated in future also.



  14. ankit Gupta says:

    Dear Ashal,
    I requested to bank to cancel the property insurance. I also contacted to SBI General to cancel my policy.

    I followed their procedure and today I got email from SBI general stating that policy has been cancelled.

    We would like to inform you that your request for policy cancellation as per Reference No. ##### is already processed and resolved.

    Please find attached the soft copy of endorsement schedule along with this mail.

    We shall get back to you in regards to the premium refund status against the cancellation of the said policy.

    Thanks for all your help.

    1. Bikramakant says:

      What happened after you got this mail, and in how much time?
      Thank You

    2. Jhandulal says:

      Did you get full refund as a benefit of free look period?

  15. Dear Ankit, we ‘ll wait for your update.



  16. ankit Gupta says:

    Dear Ashal,

    Thanks for your reply!
    I am in talk with SBI branch manager. He asked to give him a written application. I will provide application to him.

    Also I SMSed “UNHAPPY” to number 8008202020. The SBI executive asked me to meet branch manager and he also assured me if Manager does not treat me well, I can complaint to him.

    I would suggest if any one is unhappy with SBI services (BRANCH related)…they can SMS to this number.


  17. Dear Ankit, please demand a prem. quotation from SBI staff for that property insurance. With out details we can not comment.



  18. ankit Gupta says:

    I recently switched to SBI. After 35 days, 30800 has been added in my loan outstanding amount stating- DEBIT ADJUSTMENT-HOUSE PROPERTY INSURANCE. Which I remember, I never availed and neither talked about. I checked other websites and as per my Flat cost (market value 45 Lacs + 5 Lacs Appliances cost), they are offering insurance in premium ranging from 4000 to 11000. So in any case Rs 30800 are not justified. I talked in SBI branch and they said it is mandatory to insure property.

    Now please advise what can I do?

    I am very much frustrated with this unprofessional behavior of SBI personnel. And after switching to SBI, I feel there is no benefit as I have already been charged more than (55000 + its interest).

    Manish Sir, As you stated that Premium for 40 Lacs property will be few thousands but they have charged 30000 from me. is it justified? Please advise.

  19. Gaurav Patel says:

    Hey Manish thanks a lot ..I had gone today for documentation
    – property insurance they said will be at the time of the possession n wont b deducted now..n as u said its ok to go for i `m kool with it..n u make does need security

    – as far as insurance policy is concerned..they had already sanction loan for insurance amount as well..ard 65000 rs paid in 5 equal installments for 5 years n it will cover 25 years of loan tenure..since they hd considered it as a part of it wud delay the process i went for the policy..but i still have my brothers file in process..n for that from now only i clearly said..i `m not gonna fall for any cross selling n i ve been reading a lot on jago investor n insurance can never be mandatory 🙂

    thanks a lot for ur valuable inputs …n i `m glad to have come accross ur site..have called my insurance LIC agent home today..he has chipkaofied us so many policy…in nutshell..if i surrender my policy on an avg. i get 55% surrender loan is at 10.5% thinking tht i shud surrender it..get the amount n keep it in my max gain account..

    this is list of my policy
    Policy name – start Date – yearly Premium – total premium paid till date – surrender value – Date of last payment – Date of maturity

    New jeevan shree – dec 2002 – 31900Rs – 319000Rs – 210410Rs – dec 2018 – dec 2027(only this policy has different date of last payment n maturity)

    Jeevan Anand – feb 2005 – 10221rs – 81768rs – 51143rs – feb 2030
    Jeevan Anand – oct 2009 – 4834 – 14502 – 3596 – oct 2032
    Jeevan Anand – oct 2009 – 4374 – 13122 – 2939 – oct 2034
    Jeevan Anand – oct 2009 – 4010 – 12030 – 2430 – oct 2036
    Jeevan Anand – oct 2009 – 3728 – 11184 – 2030 – oct 2038
    Jeevan Anand – oct 2009 – 3428 – 10284 – 1716 – oct 2040

    Ltd pay profits – june 2005 – 5542 – 41565 – 16628 – june 2064

    Endowment with profits – june 2005 – 3066 – 22995rs – 13737rs – june 2029
    Endowment with profits – june 2005 – 2810 – 21075 – 11568 – june 2031
    Endowment with profits – june 2005 – 2592 – 19440 – 10372 – june 2033
    Endowment with profits – june 2005 – 2404 – 18030 – 9387 – june 2035
    Endowment with profits – june 2005 – 2256 – 16920 – 8587 – june 2037
    Endowment with profits – june 2005 – 2128 – 15960 – 7919 – june 2039
    Endowment with profits – june 2005 – 2016 – 15120 – 7360 – june 2041
    Endowment with profits – june 2005 – 1918 – 14385 – 6896 – june 2043

    Dont do calculations..jst if u can give me a gist then it wud b of great help..thanks once again manish

  20. Ok

    1. House Insurance – This is mandatory at times and comes extremelly cheap . I mean if you have spent 40 lacs on house , this should not come for more than few thousand rupees or even less . Its because this situation –

    What if some thing happens to house like earthquake , fire or anything and house is destroyed, you say to bank that you will not pay them anything more .. where does the bank go ? So its like their insurance and more than that , you are also proected . Anyways its a good practice to take this one , so see it in positive way

    2. Max Gain somthing something – This is totally wrong, and illegal , they are just doing it to pressurize you so that you go for it because “you dont want to loose the loan” , but stay calm, and tell them that you have read and how companies have this tactices and tell them you read about how people facing similar issues have complained to banking ombudsman and won the cases agianst the bank for mal practice . Also tell them that Manish will mail the Higher authorities of the bank with their employees name and he is too active on twitter and knows how to dig for contacts who will screw them . Just tell them this and tell them you dont want the loan and will get something done about this with RBI and banking ombudsman .

    This will be enough I guess

    And anyways sign the papers after reading it properly .


    1. Rohit Dekhane says:

      Hi Manish,

      On House Insurance : It correct to go for it considering it covers earthquakes, fire ,etc. But my point is why the agreement value is considered ? I think the construction cost should be considered ? If somebody purchases an old property 20 years plus is the depreciation considered by these banks forcing the house insurance ??? They are just making money in order to make their bank more profitable and promoting their group companies / other insurance providers !!!

      1. Dear Rohit, if one pursues his/her case, SBI or any other bank agrees to insure the construction cost.



        1. Kartik Sudarshana says:

          Hello Rohit, Ashal,

          Ashal is absolutely right. I complained to both SBIGen and my SBI Home Loan branch and they agreed to give me a new policy with only construction cost considered. They had deducted 40K for me. After considering only Construction cost, premium is 23K. for the remaining 17K, I had to wait for around 2 months to get the refund back. Horrible delay in service. But I gave a written complaint to SBI home loan branch to give me the interest I lost for the 17K ( @ 10.4% interest) back to me. Just yesterday ( 6 Mar 2014), I got Rs 272/- refunded back.. It might be a small amount but I am quite happy I could get back not only the excess premium amount but also this small interest component.

          Special thanks to Ashal for the above comment which helped me take the step and save close to 17K money..


          1. ashalanshu says:

            Dear Kartik, kudos to you for keep asking and following up for your money.



          2. yuva010 says:

            Hi Kartik,

            Its good to know the difference and impact of your efforts. It encourages us.
            I wanted to know, how did you calculate the construction cost for property.

            In my case, property valuation is 52 Lakh. Approved Loan by SBI is 40 Lakh. The property insurance Premium 34,000/-
            Now I don’t know whether its fair value or not. And whether its on 40 Lakh or 52 Lakh. I am checking with other PSU Insurance Providers as well.

    2. timir126 says:

      Hi Manish,
      Can you please share the emails of SBI & RBI officials?

      Today when I visited the Race Course Branch, Bangalore for Home Loan, They pressurize me to take property Insurance, and telling it is Mandatory.

      Though didn’t charge me today, though said registry can’t be done without it.

      I talked to Chief Branch Manager, and he was continuously pushed me, and threatened me about the Loan. Told me that he has RBI guidelines for the mandate, which he can’t share.

      Vishnu Agarwal

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