dear all,
i have a very serious query, i have recently purchased a flat with loan from
central bank of india, they have tie up with cholamandalam insurance,
i enquired with othe companies like icici lombard, allianz, aig, etc,
they all do insurance on reinstatement value basis.
that is premium is calculated by built up area of flat in sq.ft x construction rate per sq.ft, no body does on market value.

for example if i have a 1000 sq.ft flat which cost me 50 lacs,
premium would be calculated by 1000 sq,ft (flat area ) x 1200/- per sq.ft say construction cost, which comes to around 12 lacs say, so premium will come to around 1000rs per year.

now bank is telling me to do insurance on market value that is 50 lac rs.
and cholamandalam are ready to do it on market value, while other companies have clearly mentioned they dont do it on market value,

basic objective of home insurance for structure is , the insurance comapny pays us only the amount which is needed to reconstruct our house in case it get s destroyed, they never give us market value of our flat,
so is the bank right in asking me to do it on market value, and also why cholamandalam is ready to do insurance on market when no other co is willing to do so,

guys plz clarify on this issue, will chola pay me 50 lacs if my house gets destroyed.

please need genuine inputs from experts,
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  • Central bank of india and tie up for one stop banking Central bank of India has tied up with both

    Originally Posted by redboogieman
    dear all,
    i have a very serious query, i have recently purchased a flat with loan from
    central bank of india, they have tie up with cholamandalam insurance,
    i enquired with othe companies like icici lombard, allianz, aig, etc,
    they all do insurance on reinstatement value basis.
    that is premium is calculated by built up area of flat in sq.ft x construction rate per sq.ft, no body does on market value.

    for example if i have a 1000 sq.ft flat which cost me 50 lacs,
    premium would be calculated by 1000 sq,ft (flat area ) x 1200/- per sq.ft say construction cost, which comes to around 12 lacs say, so premium will come to around 1000rs per year.

    now bank is telling me to do insurance on market value that is 50 lac rs.
    and cholamandalam are ready to do it on market value, while other companies have clearly mentioned they dont do it on market value,

    basic objective of home insurance for structure is , the insurance comapny pays us only the amount which is needed to reconstruct our house in case it get s destroyed, they never give us market value of our flat,
    so is the bank right in asking me to do it on market value, and also why cholamandalam is ready to do insurance on market when no other co is willing to do so,

    guys plz clarify on this issue, will chola pay me 50 lacs if my house gets destroyed.

    please need genuine inputs from experts,

    Your question is very interesting and needs to be clarified properly from the bank and the fine lines of policy document need to be read and doubts checked up wihtout any doubt.

    Central Bank of India has linked up with LIC for life insurance products and Cholamandalam MS General insurance to undertake non-life insurance as corporate agent of the insurance cos on fee basis without any risk participation.
    However you should confirm the basis of determination of market value. Market value will defintely vary from registered value (price you have registered the flat for in Registrar office)
    What is the extent of loan being taken by you? What premium will be paid for covering that amount of loan versus covering the flat for market value.
    specifically ask them whether they will pay 50 lakhs if need arises or whatever?Whatever I have read is that such policies of market value polcies are available, BUT YOU NEED TO CHECK FULL DETAILS and restrictive covenants.
    disclamer- I am not an insurance expert.
    CommentQuote
  • Loan taken is only 12.50 lacs
    CommentQuote
  • Home Loan

    Originally Posted by redboogieman
    Loan taken is only 12.50 lacs

    One type of insurance which is good as a cover against untoward incidents is to cover the amount of laon. this cover will ensure that NOK do not have the liability of repaying loan in case of death of person taking the laon. this way property will be safe and no financial load due to laon will fall on the family.
    Other type of insurance is general standard fire and other perils insurance on the flat during duration of loan. This type of insurance cover will be compulaasory for many institutions giving house loans.The insurance cover will protect the home laon company against loss of asset due to natural calamity etc.
    Please clarify from bank in all details regarding market value insurance and repalcement/reinstatement basis of insurance.Most of the policies say covered under clause 19,12 etc. what do these clauses say and what they mean should be clear to the person taking insurance.
    CommentQuote
  • dear vaibhav ,there are two diffrent prducts, the one which u are talking in which insurance company pays the balance loan amount in case something happens to the flat owner, that scheme is loan protect scheme, well in my case bank is not asking for it,
    they are concerned with what if something happens to the property so they are asking for home insurance to protect from natural disasters like quake and floods or roits etc in whihch bldg gets demolished,
    and for this type of insurance the insurance company does the insurance on built up area and to cost of construction by this forumala,

    they dont take the value at which you bought the flat , but insure you the amount which is required to rebuild ur house in case it gets demolished due to natural calamities,

    but central bank is asking to do on flats value at which i bought not on
    area x constn rate basis,
    and cholamandalam is ready to do it where as other cos have refused it,
    now i dont think chola will pay me 50 lacs full value of my flat if it gets deemolished they will pay me only 1000 sq.ft x 1000rs that is 10 lacs i think lets see what this idiots are upto.:bab (45):
    CommentQuote
  • Originally Posted by redboogieman

    but central bank is asking to do on flats value at which i bought not on
    area x constn rate basis,
    and cholamandalam is ready to do it where as other cos have refused it,
    now i dont think chola will pay me 50 lacs full value of my flat if it gets deemolished they will pay me only 1000 sq.ft x 1000rs that is 10 lacs i think lets see what this idiots are upto.:bab (45):

    If I understand it correctly, you are being asked to do insurance i.e. you are going to pay the premium.

    One - I am not aware if this is a standard pre-condition for giving loan.
    Two - Irrespective of the type of insurance, premium to be paid for insurance of (say) 10 lac will always be much lesser than premium for (say) 50 lacs. So higher the sum insured, higher is the premium you pay.

    I am not sure why bank should ask you for such an insurance. And that too for market value. It may just be to give business to their tie-up partner.

    Such insurance premium are typically one-time (i.e. when you take it). Add it to your interest outgo calculation when you compare loans from different options you have.
    CommentQuote