Insurance on the house is against natural calamities, theft. It covers all the possessions in the house and the house itself. This is needed before going in for a mortgage or a refinance because in case of a calamity or default, why should the lender suffer.

Generally, the lenders insist on it because the name of the mortgager / company is put on insurance certificate. He is entitled to the payment in case of any hazard or default on the part of the borrower. The insurance can be paid in one year after taking the loan or spread over the term of the loan.

To take a good insurance, go to a reputed insurance company that will honestly evaluate the home.