Homeowners insurance covers damage to your home and its contents from fire, wind, theft, and most other hazards. It also includes liability coverage if someone is injured on your property. Mortgage lenders require it as a condition of the loan.
You're free to shop for the policy. Premiums vary by location, home age, claims history, and deductible. Get at least three quotes — the difference between policies can be hundreds of dollars per year.
If you escrow taxes and insurance, the lender collects 1/12 of the annual premium with each mortgage payment and pays the insurer when due. Always keep an extra copy of the declarations page; underwriters request it before closing.