Though it may surprise many new homeowners, home insurance isn’t generally required by federal or state law. This doesn’t mean that you can live without home insurance, however. 

Most lenders will require you to carry a certain amount of insurance to protect your home. They may require you to carry enough home insurance to at least cover your mortgage, although higher limits are also an option depending on your home insurance needs. 

You may also be required to carry certain types of home insurance depending on where you live. For example, a basic home insurance policy does not cover damage to your home or belongings caused by floods or earthquakes. If you live in an area where these natural disasters are especially common, you could be required to carry additional flood insurance or earthquake insurance. In some areas, these are offered through state sponsored programs. 

Do I Need Home Insurance After I Pay Off My Mortgage? 
Even once you have paid off your home, it is recommended that you carry home insurance, although your coverage needs may change. Home insurance is designed to help you bear the brunt of expensive damages and loss to your home or personal belongings. Going without insurance even on a home that is paid off can leave you facing expensive bills to repair or rebuild your home. 

How Much Home Insurance Do I Need? 
Aside from any requirements, it is generally recommended that you carry your home’s total replacement cost value in home insurance. The total replacement cost value of your home is how much it would cost to completely rebuild your home after a disaster. You should never carry less than 80% of this value in home insurance, otherwise you could have gaps in your coverage due to the 80% rule in home insurance. 

This rule states that, should you carry less than 80% of your home’s total replacement cost value in home insurance, you may not receive total compensation for your losses after filing a claim. Be sure to speak with your insurance agent about how much insurance and what types of coverage you need for your home. 

Not every home has the same total replacement cost value, especially if you have performed upgrades or other updates. Carefully calculate your home’s total replacement cost value before choosing what insurance policy is best for you, your home and your family.