Reinstatement value guidance
Most homeowners are unsure how to calculate the right sum insured. We help you estimate the construction cost of your property correctly, so you are neither over-insuring nor underinsured.
Expert Intro
For most Indian households, a home is the single largest financial investment of their lives. Yet home insurance — the one product designed to protect that investment from fire, flood, earthquake, and theft — remains among the most under-purchased categories of insurance in the country.
The financial consequences of an uninsured property loss can be devastating. A fire, a cyclone, or severe flooding can cause damage that takes years of savings to rebuild — or in the worst case, leaves a family with an outstanding home loan on a property that no longer stands. Home insurance is the protection that stands between a catastrophic event and a financial crisis.
Did You Know?
General insurers paid out ₹12,775.6 crore in fire claims alone in FY 2024–25, accounting for nearly 12% of all non-health insurance claims settled across the industry (IRDAI Annual Report FY24-25). This reflects both the scale of fire and allied peril losses in India, and the financial lifeline that property insurance provides when disaster strikes.
What is Home / Property Insurance?
Home and property insurance provides financial protection against physical loss or damage to a residential property — covering the structure (building), its contents, or both — caused by defined perils including fire, natural calamities, theft, riot, and impact damage. Policies are available as standalone building cover, standalone contents cover, or as a combined building-and-contents policy.
The sum insured for a home insurance policy is based on the property’s reinstatement value — the estimated cost of rebuilding the structure at current construction rates — not the market value or stamp duty value of the property. This distinction is important: market value includes land, which cannot be insured under a property policy.
Bharat Griha Raksha — India’s Standard Home Insurance Policy
From 1 April 2021, IRDAI mandated all general insurers to offer the Bharat Griha Raksha (BGR) — a standardised home insurance product designed to simplify and bring consistency to home building and contents cover. Key features of the BGR include:
| BGR Feature | Detail |
|---|---|
| Coverage | Home building and/or home contents |
| Perils Covered | Fire, lightning, storm, cyclone, typhoon, tornado, tsunami, flood, earthquake, subsidence, landslide, rockslide, forest/jungle/bush fire, impact damage, riot, strike, malicious damage, terrorism, bursting of water tanks/pipes, sprinkler leakage, theft |
| Policy Duration | Up to 10 years (long-term policy available) |
| Contents Cover | Automatic contents cover of 20% of building sum insured, up to ₹10 lakh, without detailed declaration required |
| In-Built Covers | Loss of rent and rent for alternative accommodation, removal of debris, architect’s and surveyor’s fees — all included |
| Optional Covers | Personal accident cover of ₹5 lakh each for insured and spouse; valuable contents cover on agreed value basis |
| No Underinsurance | No underinsurance penalty applies under BGR — a significant consumer benefit |
| No Excess | No policy excess (deductible) applies under BGR |
What This Means for You
The BGR’s no-underinsurance and no-excess provisions mean that in the event of a claim, you receive the full assessed loss amount up to the sum insured, without the reductions that typically apply under older policy structures. This makes it a significantly more consumer-friendly product than the Standard Fire and Special Perils (SFSP) policies it replaced for residential properties.
What Home Insurance Can Cover
| Cover Type | What It Protects | Who It’s For |
|---|---|---|
| Building / Structure Cover | The physical structure of the property — walls, roof, flooring, built-in fixtures, boundary walls, and permanent installations | Homeowners and property owners (not tenants) |
| Contents Cover | Furniture, appliances, electronics, clothing, and personal belongings within the home | Both homeowners and tenants |
| Combined Building + Contents | The structure and its contents under a single policy | Most homeowners — the most comprehensive option |
| Valuable Items Cover | High-value items such as jewellery, artwork, and antiques, typically on an agreed-value basis | Households with high-value personal property |
| Alternative Accommodation Cover | Cost of temporary accommodation while the property is being repaired after a covered loss | Typically included as an in-built benefit under BGR |
Covered Perils and Key Exclusions
| Typically Covered | Typically Excluded |
|---|---|
| Fire, lightning, explosion | Gradual wear and tear or deterioration |
| Storms, cyclones, floods, earthquakes | Loss or damage caused by willful act or negligence of the insured |
| Landslides and subsidence | Damage to electrical appliances from mechanical/electrical breakdown |
| Riot, strike, and malicious damage | Loss of cash or documents |
| Terrorism damage | War, nuclear risks, or consequential losses |
| Bursting or overflowing of water tanks/pipes | Losses not reported to insurer within stipulated timeframe |
| Impact damage from vehicles or falling objects | Pre-existing structural defects or damage |
| Theft | Damage due to insects, pests, or vermin |
Note: This is a general indication. Covered perils and exclusions are specifically defined in the policy document. Always read the KFS and policy document before purchase.
Home Insurance and Home Loans
Home Insurance Is Often Required by Lenders
Many banks and NBFCs — including those whose home loans are distributed through Sharan — require a valid home insurance policy as a condition of loan sanction or disbursement. This protects both the borrower and the lender against catastrophic loss of the asset. If you are taking a home loan, confirm with your lender whether home insurance is required and for what coverage level.
Where home insurance is taken alongside a home loan, the policy term should ideally match or exceed the loan tenure. The insurer’s interest may also need to be noted on the policy if required by the lending institution. Our team can help you structure the cover appropriately.
Why Get Your Home Insurance Through Sharan
“Your home is your most significant financial asset. Its insurance
should reflect that — not just the cheapest option available.”
BGR vs. other plans
We explain the differences between the standardised Bharat Griha Raksha and other home insurance products in the market, so you can choose with confidence.
Contents assessment
We help you estimate the value of insurable contents so your policy covers what you actually own, not just the structure.
Lender coordination
Where home insurance is required as a condition of your home loan, our team can assist with the documentation and noting of lender interest on the policy.
KFS review
We assist with a full review of the Key Fact Statement (KFS) before purchase, as required under IRDAI Regulations 2024.
Quick Eligibility Checker
Quick Self-Check — Are You Ready to Apply?
Tick the boxes that apply to you.
This self-check is indicative only. Final eligibility, premium, coverage and policy issuance remain subject to the insurer’s underwriting, terms and conditions.
How to Get Covered: Step-by-Step
01
Property Details & Coverage Discussion
Share the property address, type (flat, independent house, row house), construction type, and whether you need building cover, contents cover, or both.
02
Sum Insured Estimation
We help you estimate the reinstatement value of the building and/or the value of insurable contents, so the sum insured reflects your actual exposure.
03
Plan Comparison & KFS Review
We present suitable plans from our partner insurer network, including the Bharat Griha Raksha, and walk you through covered perils, exclusions, and terms.
04
Application & Documentation
Property ownership documents, KYC, and any other required documentation as per the insurer’s requirements.
05
Property Inspection (if applicable)
Some insurers may require a property inspection for higher-value homes before issuing the policy.
06
Policy Issuance
Policy issued by the insurer. A 30-day free look period applies, per IRDAI Regulations 2024.
Documents Typically Required
- KYC documents (identity and address proof of the proposer)
- Property ownership proof (title deed, sale deed, or allotment letter)
- Property address and details (built-up area, construction type, year of construction)
- Previous home insurance policy, if renewing from another insurer
- Lender details, if home insurance is being taken alongside a home loan
Frequently Asked Questions
1. Is home insurance mandatory in India?
Home insurance is not legally mandatory for residential property owners in India, unlike motor insurance. However, many banks and NBFCs require it as a condition of a home loan sanction to protect their security interest. It is strongly advisable for all homeowners, loan-linked or otherwise.
2. What is the Bharat Griha Raksha policy?
Bharat Griha Raksha (BGR) is IRDAI’s standardised home insurance product, mandatory for all general insurers to offer from 1 April 2021. It provides comprehensive cover for home buildings and contents, with consumer-friendly features including no underinsurance penalty, no excess, and automatic contents cover of 20% of the building sum insured up to ₹10 lakh.
3. Should my home insurance sum insured be based on market value or construction cost?
Your home insurance sum insured should be based on the property’s reinstatement value — the estimated cost of rebuilding the structure at current construction rates — not the market value (which includes land, which cannot be insured). Underinsuring based on market value is one of the most common home insurance mistakes.
4. Does home insurance cover tenant-occupied properties?
Building cover typically requires you to be the property owner. Contents cover, however, is available to both owners and tenants, protecting furniture, appliances, and personal belongings. Tenants should specifically look for tenant’s contents insurance rather than a full building policy.
5. Are natural calamities like floods and earthquakes covered?
Yes. Under the Bharat Griha Raksha and most comprehensive home insurance plans, natural calamities including floods, earthquakes, cyclones, storms, landslides, and subsidence are covered perils. Always verify the specific perils listed in your policy document.
6. What happens to my home insurance if I have a home loan?
Where home insurance is taken as a condition of a home loan, the lender may require their interest to be noted on the policy. The policy term should ideally match or exceed the loan tenure. Our team can assist with the documentation and lender coordination for this.
7. Is the land covered under home insurance?
No. Home insurance covers only the structure (building) and its contents. Land cannot be insured under a property insurance policy, which is why the sum insured must be based on construction or reinstatement cost, not market value (which includes land).
⚠ Important Disclosure
Standard Disclaimer: Home and property insurance is subject to terms, conditions, covered perils, and exclusions. Sum insured should be based on reinstatement value, not market value. Claims are subject to the insurer’s terms and surveyor’s assessment. Sharan Financial Services Pvt. Ltd. is a registered [Corporate Agent / Insurance Intermediary] with IRDAI. Registration No.: [INSERT]. Insurance is the subject matter of the solicitation. For grievances: IRDAI Grievance Call Centre — 155255 or 1800 4254 732.