Why Do Mortgage Companies Require Homeowners Insurance? 
Mortgage companies require homeowners insurance because they have an interest in the home . When you get a mortgage you are getting a secured loan , the security is in the form of collateral , which happens to be the house . If the house is destroyed so is the collateral that the loan is based upon . A mortgagee will require that it be the loss payee on the home in the event it is destroyed . If the home is destroyed , the insurance company will pay out to the mortgagee , but you will be entitled to any payment that is above the outstanding loan . I hope this helps . 