Homebuyers take note! It’s important to take RERA insurance from your builder - here’s why

RERA insurance is important: In a recent case, a group of homebuyers approached the Karnataka RERA tribunal to secure insurance documents required to carry out repairs to a section of their building that had been damaged by fire.

Although the builder had already handed over possession of the apartments, the insurance documents mandated under Section 16 of RERA had not been provided. The Karnataka RERA directed the developer to either supply the insurance papers to the homeowners or bear the cost of the repairs.According to an ET report, in an order dated November 29, 2025, Karnataka RERA (K-RERA) Chairman Rakesh Singh and Member G.R. Reddy held that if a developer fails to obtain the insurance required under RERA or does not transfer it to the owners’ association, any loss that would ordinarily have been covered under such insurance cannot be imposed on the residents.K-RERA emphasised that developers cannot avoid their obligations, as obtaining insurance for the common areas of a residential project is a statutory requirement.The authority further clarified that developers are required to hand over copies of the insurance policy even after maintenance responsibilities have been transferred to the apartment owners’ association. Under Section 16 of the Real Estate (Regulation and Development) Act, developers are legally required to insure the building, and K-RERA underscored that this requirement is not a mere procedural formality.

What is Section 16 insurance?

Sudheer Madamaiah, Partner at Khaitan & Co, told ET that Section 16 of the RERA Act obliges promoters to obtain insurance coverage for their real estate developments. The insurance must cover both the land title and the construction, and it remains valid until possession of the property is transferred.Madamaiah said, “Karnataka RERA authorities in its recent rulings, has categorically affirmed that compliance with Section 16 is not optional.

The promoter is required to obtain the insurance, pay all premiums up to handover, and thereafter transfer the benefit of such insurance to the Association of Allottees.”He explained that promoters must demonstrate compliance by submitting copies of insurance policies, premium payment receipts and documents confirming the transfer of the insurance. Failure to do so amounts to a violation of statutory obligations under RERA.

Should homebuyers demand a copy of the Section 16 insurance policy at handover?

Madamaiah said homebuyers should ensure that copies of the insurance policies are provided when possession is handed over.He said, “Section 16(3) expressly mandates the promoter to transfer the benefit of the insurance and all related documents to the Association or the allottees, as applicable.”According to Madamaiah, once possession is transferred, the promoter’s responsibility for maintaining the project ends and the duty to keep the insurance active passes to the homebuyers or the association.He added, “Without access to the policy documents, homebuyers would be unable to enforce or continue the coverage. Accordingly, insistence on these documents is not merely advisable but rooted in a statutory entitlement under RERA.”

What can homebuyers do if the builder has not obtained Section 16 insurance?

Madamaiah said, “Karnataka RERA has held that where mandatory insurance is not obtained, the promoter may be liable for losses directly attributable to such failure.”He also pointed out that regardless of whether insurance has been obtained, Section 14(3) of RERA provides for a defect liability period of five years from the date possession is handed over. During this period, the promoter is required to rectify structural issues or other specified defects within 30 days.