Bio-composites have emerged as sustainable materials with huge potential in heating and cooling applications due to their low thermal conductivity, lightweight nature, and eco-friendly characteristics. This study focuses on the development and characterization of jute gunny bag, bagasse, and hybrid composites containing jute and bagasse fibers reinforced with polyester resin matrix. The composites were fabricated using the hand layup technique, and mechanical and thermal properties were evaluated as per ASME standards. Flexural strength was tested using a tensometer, while thermal conductivity was measured using a thermal conductivity meter. The results revealed that the hybrid composite exhibited a flexural strength 4.2 times greater than the bagasse composite. Additionally, all three composites showed thermal conductivity values below 0.17 W/mK, highlighting their good thermal insulation capabilities. Based on the findings, these bio-composites are recommended for thermal insulation in sustainable construction, HVAC systems, and energy-saving applications, aligning with global efforts to reduce carbon footprints and promote renewable materials.