What type of insurance do lenders often require from homebuyers?

Lenders typically require homeowners insurance from homebuyers as a condition for approving a mortgage. This insurance protects the home and the lender's investment in case of damage to the property from events such as fire, theft, or natural disasters. Since the home serves as collateral for the loan, ensuring that it is protected helps the lender mitigate the risk of financial loss. Homeowners insurance also often includes liability coverage, which can protect the homeowner in case someone is injured on the property. This comprehensive protection makes homeowners insurance a key requirement in the lending process.

While title insurance is also important to protect against issues related to property ownership, it is not usually required by lenders in the same way homeowners insurance is. Health insurance and liability insurance, while relevant in different contexts, do not directly protect the property's value or the lender's interest in a mortgage.