Business Fire Insurance for "Mortgage Business"

When taking out a mortgage loan, it is the customer's obligation to the bank to insure the mortgaged property on the basis of the cover required by the Bank. However, the mandatory basis of the agreement with the Bank is the insurance of the mortgaged property and not the choice of the Insurance Company. Any owner can approach any Insurance Company and choose the best plan for him and his property. Specifically, the Consumer Credit Act provides as follows:

“Any insurance coverage that a mortgagee may require a debtor to conclude and maintain in respect of immovable property mortgaged to the mortgagee may be negotiated by the debtor with any insurer”.

The insured amount is determined by the value of the property and not by the amount of the loan you have taken from the bank. Make sure to insure your property at the actual rebuilding value and not at the amount of the loan. Note that it is not the value of the land that is taken into account, but the value of the property and the cost of reconstruction. That is, the cost of restoring the property to the same condition it was in before the loss.