Why Is Home Insurance Required?

  1. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    In the vast majority of cases, when a home is sold, there is a mortgage involved. The insurance helps protect you, and the lender from suffering a financial loss if something were to happen to the home before that financial obligation was repaid. It is also a way to help you protect against the loss of your personal property if something terrible happened to your home, and protect you if someone were injured in your home or on your property. Hope that answers your question, if not, please feel free to contact me through the link on my profile page.
    Answered on March 29, 2014
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  2. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    The agency requiring homeowner’s insurance is your mortgage company.  The mortgage company has loaned you a considerable amount of money.  The collateral that they hold for the loan is the home itself.  This is called a secured loan.  The homeowner’s policy that they require secures their interest.  If the house should be completely destroyed by a fire the settlement will be first to the mortgage company and then to you.
    Answered on August 5, 2014
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  3. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is a great question! Chances are, when you bought your home you had to get one or more mortgages. You borrowed what was most likely a very healthy sum of money from a financial institution that would like to get that money back, especially if something bad were to happen to the home before the loans were repaid. They are the reason why you have to have homeowners; that and so you don't have to go into bankruptcy replacing all of your belongings in the same bad situation. I hope that helps, thanks for asking!
    Answered on August 6, 2014
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  4. 14231 POINTS
    Tom Sheehan
    Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482
    Mortgage companies require that you obtain and maintain acceptable Homeowners Insurance as one of the conditions of approving you for your home loan. In their case, it is to be sure that THEIR interest in your home is protected from loss caused by a covered peril. In some cases, If your home is located in a higher risk flood zone, they will extend that requirement to include Flood Insurance as well. When you are fortunate enough to pay off your mortgage, this should not be an event that makes you to consider cancelling your Homeowners' and Flood Insurance policies, however. The mortage cmpany no longer has an interest in the security of your home but you and your family certainly do.
    Answered on July 13, 2015
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