Required Insurance

What Does Required Insurance Mean?

Required insurance refers to an insurance policy that a policyholder must maintain to retain a certain status or ownership of property. Examples include health coverage mandated by the state for all citizens or property insurance required for a commercial building to legally operate.

Insuranceopedia Explains Required Insurance

There are many situations where insurance is mandatory, typically when a person or entity needs to transfer certain risks, and insurance is the only means of doing so. Beyond government mandates, lenders and landlords often require insurance too. A mortgage bank won’t close on a home loan without proof of homeowners coverage, and most commercial landlords expect their tenants to carry commercial property insurance on the building’s contents and stock.

For example, the state requires vehicle owners to obtain insurance before they are legally permitted to drive, and driving without insurance is illegal. The exact amount of coverage you need depends on where you live, since each state sets its own minimum car insurance requirements for liability and other coverages.

Similarly, employers must provide insurance or ensure their employees are covered for health and retirement. Failing to do so could put their business at risk. Nearly every U.S. state also requires businesses with employees to carry workers compensation insurance, which pays medical bills and replaces lost wages when a worker is hurt on the job.