Homeowners insurance is not a legal requirement and there is no local, state or federal statute which makes having homeowners insurance required by law. The reason why this is not an issue is because most homeowners normally do not own their homes outright and those that do can either opt to have homeowners insurance or not. For homeowners who do not currently own the title on the property the lender or other financial organization which does, will normally require having homeowners insurance as well as additional coverage until the loan is paid in full.
For many first-time home buyers, or any property owner for that matter, the mortgage lender whether, it be a federal loan or a conventional loan offered through a bank or credit union, will require homeowners insurance and it will normally be paid from the escrow account. Just as comprehensive and collision automobile insurance is normally required for all individuals who do not own the title to the automobile out right, homeowners insurance is required for the same reason. The financial institutions which are loaning the money to purchase a few hundred thousand dollars worth of property want to ensure that their property is well protected and paid for should anything happen such as fire or damage resulting from a natural disaster. In addition to homeowners insurance it is normally a requirement to have PMI or Private Mortgage Insurance if the loan is federally insured or 20% or more is not put down at the time of purchase.
As stated earlier though it is not a legal requirement if homeowners who own the title outright with no outstanding secondary mortgage or home equity line of credit can choose not to have homeowners insurance. Would any property owner conceivably want to go this route? Not likely as the risk of completely losing the property and subsequent investment is far too great for the amount it costs to cover to home with insurance. It's possible there are scenarios where a home is only worth $100,000 and the homeowner is worth millions and they are home all the time. This would make it must less likely for the home to be a complete loss to fire or some other calamity. But again, even in this scenario why would someone not purchase $1,000 or so worth of homeowners insurance?
Homeowners insurance is not required by law but it is a commonsense measure for property owners who own the title outright and for individuals who currently have an outstanding mortgage to still protect themselves and their investment by purchasing homeowners insurance. Insurance in general is a hedge against future catastrophe whether that be automobile insurance, life insurance or homeowners insurance. Hopefully there is never any situation for which someone would have to exercise their homeowners insurance policy but in the event that that day transpires it's always better to have insurance and not need it then to need insurance and not have it.