Property Insurance in India: Coverage Types and Claim Process for Owners

Buying a home in India isn’t just about the down payment or the EMI. It’s about protecting what you’ve built-brick by brick, savings by savings. But too many owners skip property insurance until it’s too late. A fire, a flood, or even a stolen AC unit can wipe out months of work. The good news? Property insurance in India is simple, affordable, and legally smart. You don’t need a lawyer to get it right. You just need to know what’s covered and how to file a claim without the headache.

What Property Insurance Actually Covers in India

Property insurance in India isn’t one-size-fits-all. Most policies fall into two main buckets: structure coverage and contents coverage. Structure coverage protects the physical building-walls, roof, floors, fixed fittings like built-in kitchens or plumbing. Contents coverage protects what’s inside: furniture, electronics, appliances, jewelry, even curtains.

Standard policies cover damage from fire, lightning, explosion, storm, flood, earthquake, and riots. That’s the baseline. But if you live in a coastal area like Goa or Mumbai, you’ll want to check if storm surge and saltwater damage are included. Some insurers exclude these unless you pay extra. Same goes for earthquakes-many basic plans don’t cover them, even though India has over 59% of its land in seismic zones.

Third-party liability is another key part. If a visitor slips on your wet floor and breaks a leg, your policy can cover medical bills and legal fees. Without it, you’re on the hook for everything. A 2023 survey by the Insurance Regulatory and Development Authority of India (IRDAI) found that 68% of property claims in urban areas were related to third-party injury. That’s not a small risk.

What’s Not Covered (And Why It Matters)

Not everything gets protected. Wear and tear? Not covered. A leaking pipe from an old bathroom? That’s your problem. Termite damage? Usually excluded unless you add a rider. Mold from long-term humidity? Also out. These are considered maintenance issues, not sudden accidents.

High-value items like art, antiques, or expensive jewelry often have sub-limits. A policy might say ‘up to ₹50,000 for valuables’-but if your diamond necklace is worth ₹2 lakh, you’re short by ₹1.5 lakh. You need to declare these items separately and pay a small extra premium. Many owners don’t realize this until they file a claim and get a tiny payout.

Also, if you rent out your property, your standard homeowner’s policy won’t cover tenant-related damage. You need a landlord-specific policy. And if you’re renovating? Most policies freeze coverage during construction. That’s a trap. One owner in Pune lost ₹8 lakh when a fire broke out during a kitchen remodel-his insurer said the policy was void because renovations were ongoing.

How to Choose the Right Policy

Don’t just pick the cheapest quote. Compare three things: sum insured, exclusions, and claim settlement ratio.

Sum insured should match the current reconstruction cost, not the market value. A ₹1.2 crore apartment in Bangalore might cost only ₹60 lakh to rebuild. Insuring for the higher number means you’re overpaying. Use online calculators from insurers like HDFC Ergo or ICICI Lombard-they let you input square footage, materials, and location to get a rebuild estimate.

Exclusions matter more than you think. Read the fine print. If your policy says ‘flood damage excluded unless caused by bursting of pipes,’ you’re in trouble during monsoon season. Look for policies that include ‘natural calamities’ as standard.

Claim settlement ratio tells you how often insurers actually pay out. In 2025, ICICI Lombard settled 94% of property claims, while a smaller insurer settled only 78%. That’s a 16-point gap. Choose companies with ratios above 90%.

The Claim Process: Step by Step

Filing a claim doesn’t have to be a nightmare. Here’s how it works in real life.

1. Report immediately. Call your insurer within 24 hours. Delaying can lead to claim rejection. Even if you’re not sure if it’s covered-call anyway.
2. Document everything. Take photos and videos. Don’t clean up or throw anything away. The adjuster needs to see the damage as it happened.
3. File a First Information Report (FIR) if the damage came from theft, fire, or riot. Police reports are mandatory for these claims.
4. Wait for the surveyor. The insurer sends someone within 48 hours. They’ll inspect the damage and give a report. You can ask for a copy.
5. Submit documents. This includes your policy copy, FIR (if needed), repair estimates, and proof of ownership (like your property tax receipt).
6. Get paid. Most claims settle in 7-14 days if documents are complete. If you’re unhappy with the offer, you can request a second surveyor or escalate to the IRDAI grievance portal.

One owner in Hyderabad filed a claim after a pipe burst flooded his living room. He took 47 photos, saved his water bill to prove it wasn’t negligence, and got ₹3.2 lakh in 11 days. His neighbor, who waited three weeks to call the insurer, got rejected for ‘delayed reporting’.

Common Mistakes That Get Claims Rejected

Most claim denials aren’t about fraud-they’re about simple errors.

• Not updating the sum insured after renovations or buying new electronics.
• Forgetting to declare high-value items like a home theater system or designer furniture.
• Using the property for commercial purposes (like running a home office) without telling the insurer.
• Not paying premiums on time. Even a 15-day delay can void coverage.
• Trying to fix things yourself before the surveyor arrives. That’s a red flag.

One woman in Chennai insured her house for ₹40 lakh but didn’t update it after adding a new wing. When a cyclone damaged the new part, the insurer paid only 60% of the claim because the structure’s value had changed. She lost ₹1.8 lakh.

How Much Does It Cost?

Property insurance in India is cheap. For a ₹50 lakh home, you’ll pay between ₹1,500 and ₹3,000 a year. That’s less than ₹250 a month. For a ₹1.5 crore villa in Gurgaon, it’s around ₹7,000-₹12,000 annually.

Cost depends on location, construction type, and risk. A concrete building in a low-flood zone costs less than a wooden house in Assam. Bundling with car or health insurance can get you 10-15% off. Some banks offer free property insurance with home loans-read the fine print. Often, it’s basic coverage only.

What Happens After a Claim?

After you get paid, you’re not done. Your insurer may require you to fix damage within a certain time. If you don’t, they might reduce your next premium or even cancel your policy. Also, if you’ve made two claims in three years, expect higher premiums next time. It’s not punishment-it’s risk pricing.

Keep a copy of your claim settlement letter. It’s proof you repaired the damage. If you sell the house later, buyers will ask for it. A clean claim history makes your property more attractive.

Final Tip: Review Every Year

Don’t set it and forget it. Every January, check your policy. Did you buy a new fridge? Add it. Did you install solar panels? Declare them. Did your neighborhood flood last monsoon? Consider adding flood cover. Insurance isn’t a one-time task. It’s a habit.