Unlike automobile insurance, which is compulsory by Law, Home Insurance is not compulsory or mandatory by Law.
However, in case the house has been taken on mortgage loan, then it is absolutely compulsory for the mortgagor to have an insurance cover on the house, else in case of any peril or calamity damaging the house, they will not be able to protect their investment.
The lender may not insist on any coverage for belongings or any amount that exceeds their loan. They are only interested in the coverage of their share in the investment.
Thus there is no option but to insure th house during the pendency of the mortgage. The real dilemma comes when the loan on the house has been paid off and there are no financial encumbrances over the property.
Homeowners are often tempted to save the money on the home insurance. But they conveniently forget that disaster can strike at any moment. House is the most valuable investment they have made in their life and being deprived of a roof is a serious calamity.
The cost of re-building the home may put them into a vicious financial crunch. Imagine paying the monthly installments for the home loan once again. This time again the insurance premium needs to be paid.
The best way to avoid such night mare and finding yourself in such a situation is to have an insurance cover even after you have paid back the loan for the house.