:p The government will soon make it mandatory for property developers to obtain insurance policies for all kind of properties, reports Economic Times.

Developers will also be required to pay the insurance premium for five years, even after transferring the property to the buyer. The move will ensure mandatory insurance of all properties in future.

“The insurance risks shall cover the period of construction of the building or apartments and a further period of not less than five years from the date of handing over of the possession of the last saleable building,” said a senior urban development ministry official.

“The policy shall cover the risks of not less than 90% of the value or estimated value of the land, building or apartments, as the case may be, and of risk in respect of persons likely to occupy such property,” the official added. It remains to be seen whether the developer passes the insurance costs to the buyers.

If it does, it will result in further price escalation, albeit on a modest scale. At present, there is no comprehensive policy framework determining the role of developers in providing any insurance cover to property buyers. However, some real estate companies like Ansal API, Unitech and TDI have done it on their own initiative, in some of their premium projects.

Developers have welcomed the proposed move. “To start with, there’s a wholesome insurance for project, land, construction as well as workers involved. Then there is the all-risk policy. If there’s a policy that clearly states the after sales responsibility of a developer, it will be a welcome move,” says Kamalo Taneja, Managing Director, TDI.

According to DLF senior Vice President (finance) Saurabh Chawla, the proposed move will not have much implications on developers. “Anyway, as far as commercial and retail developments are concerned, we already have complete insurance for that,” he said.
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