Lenders' mortgage insurance protects the lender in the unfortunate event of you defaulting on your home loan. When lenders agree to lend a client money, there is a small risk that they won't get the money back if the client is not able to meet the minimum repayments. Although the lender has the house as security, if property values decline that security may not be enough to cover the outstanding loan when the lender comes to sell it.
This insurance helps lenders broaden the net of who they are able to lend to by taking some of the risk out of lending the money and means that more people are likely to get a loan and the home they want sooner.
Lenders' mortgage insurance should not be confused with mortgage protection insurance, which covers borrowers for the payment of their mortgage instalments in the event of unforeseen circumstances including unemployment, illness or death.