Section 16 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 16 requires the promoter to take out the insurances that the appropriate Government notifies, which expressly include insurance of the title of the land and building and of the construction of the project. The promoter pays the premium, the cover passes to the allottees when the agreement for sale is signed, and the documents go to the association once it is formed. For a promoter checking its insurance position, our legal consultation service can help you read the notification for your State.
The promoter shall obtain all such insurances as may be notified by the appropriate Government, including but not limited to insurance of (i) the title of the land and building and (ii) the construction of the project (16(1)). He pays the premium and charges before transferring the insurance to the association of allottees (16(2)). The insurance stands transferred to the benefit of the allottee or association when the promoter enters into an agreement for sale (16(3)), and the documents go to the association on its formation (16(4)).
Section 16 at a glance
| Sub-section | What it provides |
|---|---|
| 16(1) | Promoter must obtain insurances notified by the appropriate Government, including title and construction |
| 16(2) | Promoter pays the premium and charges before transferring the insurance to the association |
| 16(3) | Insurance stands transferred for the benefit of the allottee or association on the agreement for sale |
| 16(4) | On formation of the association, all insurance documents are handed over |
Section 16(1): insurances "as may be notified"
"The promoter shall obtain all such insurances as may be notified by the appropriate Government, including but not limited to insurance in respect of—(i) title of the land and building as a part of the real estate project; and (ii) construction of the real estate project."
Two features:
- The list is a floor, not a ceiling. "Including but not limited to" means the notification may add other covers. The text names only two: title and construction.
- The duty depends on notification. The words "as may be notified by the appropriate Government" make the Government's notification the source of which insurances are required. "Appropriate Government" is defined in section 2(g): the State Government for a State, with different rules for Union territories. The Act does not say which insurers, cover amounts or policy terms apply. Those are matters for the State's notification and the market, and they differ by State. This article names no policy and no premium.
| Cover | What it protects |
|---|---|
| Title of the land and building | Loss from a defect in the title to the land and building forming part of the project |
| Construction of the project | Loss in the course of construction of the project |
The text does not say what a title insurance policy or construction policy must contain, how long it runs, or whether the allottee can claim directly from the insurer. Read the notification of your State and the policy itself.
Example. A promoter, Kulkarni Infra, builds a 120-unit project in a State where the Government has notified title and construction insurance. Under 16(1), it must obtain those covers. It cannot treat the cover as optional or wait until the buyers ask for it.
Section 16(2): the promoter pays
"The promoter shall be liable to pay the premium and charges in respect of the insurance specified in sub-section (1) and shall pay the same before transferring the insurance to the association of the allottees."
The cost is the promoter's. The text speaks of "premium and charges", so both the premium and other charges connected with the insurance are included. It does not say that the cost can be passed on to allottees through the price, and it does not forbid it either; check the agreement for sale and the State rules.
Section 16(3): the benefit passes at the agreement for sale
"The insurance as specified under sub-section (1) shall stand transferred to the benefit of the allottee or the association of allottees, as the case may be, at the time of promoter entering into an agreement for sale with the allottee."
The timing is the point: the transfer happens when the promoter enters into the agreement for sale, not when possession is given or when the association is formed. An allottee who signs the agreement therefore has the benefit of the insurance from then, as the text puts it. Before an association exists, the benefit rests with the allottee; after it, the association.
Section 16(4): documents to the association
"On formation of the association of the allottees, all documents relating to the insurance specified in sub-section (1) shall be handed over to the association of the allottees." The association is formed under section 11(4)(e), on which see our article on section 11. In the absence of local laws, the association is to be formed within three months of the majority of allottees having booked.
How section 16 fits with others
| Section | Link |
|---|---|
| Section 11(4) | Continuing promoter responsibilities and formation of the association |
| Section 14(3) | Five-year defect rectification and compensation |
| Section 18(2) | Compensation for loss from defective title |
Insurance does not replace these duties. The text of section 16 does not say that a claim under the policy discharges the promoter's liability under section 14(3) or 18(2), and it does not say the opposite.
What section 16 does not say
- It names no insurer, cover amount, premium or policy period.
- It does not say what happens if the promoter fails to obtain the insurance; check the penalty provisions of the Act and your State's rules, and see penalties under RERA.
- It does not say if the notification must have been issued before the project's registration.
- It does not say which State has notified which insurance; check the current position for your State.
Need help with project insurance?
The practical questions are which covers your State has notified, who the insurer is and whether the papers are ready to hand over to the association. Our legal consultation team can check the notification, your policies and the agreement for sale together.
Key takeaways
- The promoter must obtain the insurances notified by the appropriate Government, including title and construction cover.
- The promoter pays the premium and charges before transferring the insurance.
- The benefit stands transferred to the allottee or association when the agreement for sale is signed.
- Insurance documents must be handed to the association when it is formed.
- The Act gives no amount, insurer or term; the State notification governs.
Read next
- Section 17: transfer of title and conveyance deed
- Section 15: transfer of project to a third party
- Obligations of promoter under RERA: sections 11 to 18
- RERA compliance checklist for builders
Disclaimer: Based on the Real Estate (Regulation and Development) Act, 2016 as enacted, as consulted on 1 October 2026. Rules, forms, fees and procedures are made by each State and Union territory and its Real Estate Regulatory Authority and differ from State to State. This article is general information, not legal advice; check the official text and your State's rules before acting.