When Are You Required to Carry Insurance on a Home?


Quick Answer

There are no state laws that require homeowners to carry insurance, states Insure.com. However, if the homeowner takes a mortgage loan, the lender often requires that he carry home insurance, notes Nolo.

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Full Answer

The mortgage lender requires the borrower to carry home insurance for property damages or personal-injury lawsuits, which protect the insurer and the homeowner, reports Insure.com. Some lenders also require hazard insurance to protect against damages by fire, smoke, wind, hail and vandalism.

A borrower who does not make at least a 20-percent down payment usually must pay for private mortgage insurance to protect the lender's investment, notes Nolo. The lender often requires private mortgage insurance premiums until the homeowner gains from 20 to 25 percent equity in the home. Increased home value sometimes helps a homeowner to satisfy the requirements for private mortgage insurance.

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