Lenders require homeowner insurance to protect their financial interest in the property. Homeowner insurance provides financial protection for both the homeowner and the lender. In the event of damage to the property due to natural disasters, fire, or other covered events, the insurance helps ensure that the homeowner can repair or rebuild the property. This is crucial for the lender because the property serves as collateral for the mortgage. Without homeowner insurance, the lender's financial security would be at risk if the property were to be significantly damaged or destroyed. By requiring homeowner insurance, lenders mitigate their risk and ensure that the property remains a valuable asset. Additionally, homeowner insurance often includes liability coverage, which protects the homeowner and the lender from legal claims and expenses if someone is injured on the property. This further safeguards the lender's investment in the property. Overall, homeowner insurance is a fundamental requirement for lenders to protect their financial stake in the property and mitigate potential risks.