not defending it, but the logic is this:

the mortgage is for the land and the home, so with no coverage, a bank won't extend a traditional mortgage on an asset that isn't insured at least at assessed value. if insurance lapses during repayment, they force the cheapest on the buyer in case of disaster. the whole idea of a 30 year loan is that if you walk away, the bank gets the house to sell. they aren't going to voluntarily expose themselves to that level of risk over decades without some asset they can seize and sell.

and it is not much more per month (than assessed value) to insure a home at replacement value, in my experience. but if you somehow got your house deleted, you would still own the lot its on. which is obviously less without a residence on it, but if you're in a very desirable area to rich people, it can be significant. obviously, that would all go to cover the loan when sold anyway assuming the owed amount is greater than the lot sale value.

the people who are most screwed are the working class renters who lost all their shit and have shit/no coverage. renters insurance is pretty cheap for what it can do in disasters, but without it you just lose everything and have nowhere to go with no hope of a check in the mail.

next, the people losing the most equity are those who have paid off their homes and let their insurance lapse (James Woods). while his was cancelled by an insurer--because climate change--most states have other insurers including an insurer of last resort... because if big swaths of homes can't be insured, the property market collapses... which the state has reasons not to allow. not to mention, they can't just cancel your policy without any notice. so that bozo got notice, did nothing about it, and let it be lapsed for 4 months after the notice ran out. if you have the cash, you don't let insurance on big assets lapse. that seems like something they teach rich people in the womb and for certain drill into the heads of financial advisors, which anyone who ever has millions should hire to help them not sit on their own balls. James Woods: portrait of a risk management genius. God damn I love that story about him losing big.

anyway, you can't sell an uninsurable home unless the buyer is paying cash, because a bank won't issue a loan for it. its a tiny minority of people who can do that. so that troubles any notion of what property value is, because home value is a function of what a bank will value it to issue a loan to to buy it.

climate change is fucking with the calculus of all this, and exposing the contradictions in having local government services and revenues tied to local property value. it is a knot that won't be unwound without confronting some assumptions baked into our political economy, and under capitalism, the knot is holding a noose around our necks.

anyway, don't live in socal. or Texas. or Florida, but especially on the coast. other places too. and if you suspect my criteria, you can also independently look up articles about which insurance companies are pulling out of which states/areas and make your decisions that way. its all public information. my boomers parents could live anywhere, but they choose a place that will not be making it. I send them those articles every time an insurance company cancels policies and leaves their area for good.

for profit insurance is a house-always-wins scam, so the more customers they can sign, the more they make. they want a full casino. you can rest assured, if they are not taking money from people in a place, it's because the odds are against them in that place.