Buying a home? Builders must hand over Section 16 insurance documents to homebuyers — Rera rules explained

Builders in Karnataka are legally bound to provide mandatory Section 16 insurance documents to homebuyers or bear the cost of repairs themselves, the Karnataka Real Estate Regulatory Authority (K-Rera) tribunal ruled on November 29, 2025.In its order, K-Rera Chairman Rakesh Singh and member GR Reddy held that the obligation to obtain and transfer insurance coverage under the Real Estate (Regulation and Development) Act is not optional and cannot be avoided, even after maintenance of a housing project is handed over to an apartment owners’ association.The ruling came in response to petitions filed by a group of Karnataka homebuyers whose builder failed to provide insurance papers required for fire damage repairs in common areas. The tribunal rejected the builder’s attempt to shift responsibility onto homeowners, stating that losses covered under Rera-mandated insurance cannot be attributed to buyers.The tribunal further clarified that promoters cannot escape their duty to insure common areas by citing the transfer of maintenance responsibilities. If the required insurance has not been obtained or handed over, the promoter must cover repair costs directly.Explaining the significance of the ruling, Sudheer Madamaiah, partner at Khaitan & Co, said Section 16 insurance is a critical protection for homebuyers. “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 told ET Wealth Online.Madamaiah added that buyers should insist on receiving copies of insurance policies at the time of possession. Without these documents, homeowners cannot maintain or enforce insurance coverage after handover, leaving them exposed in the event of damage.Under Rera, promoters are liable for structural defects for five years after possession. However, in the absence of Section 16 insurance, homeowners would be forced to pursue claims directly with builders rather than through insurance, significantly increasing financial and legal risk.