Homeowners’ insurance is needed because it pays for losses and damage to the property if something unexpected happens, such as a fire, busted plumbing pipe or burglary. 

While homeowners’ insurance isn’t required by state or federal law, it is required if you have a mortgage loan as mortgage lenders have a financial investment in the property that they wish to protect.

Mortgage lenders seek to ensure that homeowners are financially capable of paying their mortgage in the event that the home is catastrophically destroyed and homeowners’ insurance does that.