Is Home Insurance Required When You Buy a House?

When you're buying a home, you're juggling a lot: offers, inspections, appraisals, closing costs—and insurance often gets added to the mix with little explanation. One of the most common questions I hear from buyers is:

“Do I have to get homeowners insurance?”

The short answer? It depends.
Let’s break it down.

If You're Financing the Home: Yes, It’s Required

If you're taking out a mortgage, your lender will require you to have a homeowners insurance policy in place before closing. Why?

Because until you've paid off the loan, the bank technically owns a portion of your home—and they want to protect their investment. Homeowners insurance covers damages from fire, theft, storms, and more, ensuring the property (and the lender’s stake in it) is financially protected.

You’ll typically need to:

• Provide proof of insurance before closing

• List your lender as a “mortgagee” on the policy

• Prepay the first year’s premium (often rolled into closing costs or escrow)

If You’re Buying the Home in Cash: It’s Optional—But Not Advisable

If you're purchasing a home outright with cash, there’s no lender involved—so technically, you’re not required to carry homeowners insurance.

But skipping insurance is a big risk. Without coverage:

• You pay out of pocket for repairs or rebuilding if disaster strikes

• You get no liability protection if someone is injured on your property

• You have zero financial cushion if the home is burglarized or vandalized

In short: cash buyers can skip insurance, but most don’t—and shouldn’t.

What Does Homeowners Insurance Typically Cover?

While policies vary, a standard plan typically includes:

• Dwelling coverage (damage to the structure)

• Personal property coverage (your belongings)

• Liability protection (injury or damage to others)

• Loss of use (temporary living expenses if your home becomes uninhabitable)

Depending on your area, you may need additional coverage for things like floods, earthquakes, or windstorms.

Pro Tips for Buyers

• Shop early. Don’t wait until the last minute to get quotes—your lender won’t close without proof of coverage.

• Bundle smart. Many providers offer discounts when you bundle home and auto insurance.

• Understand deductibles. Lower premiums often come with higher deductibles. Make sure you’re financially comfortable with your policy’s structure.

• Review annually. Once you’re a homeowner, reassess your coverage each year as property values and risks change.

Final Thought

While homeowners insurance might feel like just another item on your to-do list, it’s one of the most important forms of protection you can have. Whether required or not, it’s a wise investment in your property, your finances, and your peace of mind.

Buying a home is exciting—make sure you're protected too.