 TITLE: Do You Have to Have Homeowners Insurance? CONTENT: Is Homeowners Insurance Mandatory?\n----------------------------------\nHomeowners insurance helps you recover from acts of peril that would otherwise wreak havoc on your pocketbook, such as roof damage caused by a storm, belongings being stolen from your home or medical bills that result when someone is hurt on your property. There is no federal or state law that requires homeowners to have homeowners insurance, however the lender you work with will almost certainly require it the entire time your home is covered by a mortgage loan.\nWhile money from any claim payouts will go to you, the homeowner, the policy also works to the benefit of the lender. Most crucial to the lender is that you're able to pay for necessary home repairs. If you didn't have insurance and the expenses were outside your means, the property might fall to ruin and rapidly lose value. If a home's market value falls below the value of the loan, the lender is put in a negative financial position.\nTherefore, the lender will not just expect you to have a homeowners insurance policy when you buy the home, but will keep tabs on your payments. If you fall behind, the insurance company will alert the lender, which will then contact you. At that stage you'll have two options: Get back on track with your current insurance company or get insured with a new company. If you don't, the lender has the right to foreclose on the property.\nBe aware that homeowners insurance is different from mortgage insurance. While homeowners insurance is designed to cover the costs of what can happen in and around your property, mortgage insurance protects the lender if you were to stop sending your mortgage payments. If you default on your loan, the mortgage insurer pays the lender. Not every buyer needs mortgage insurance, though. It is usually only necessary when your down payment is less than 20% of the purchase price. When you reach that figure, you can usually drop it. END