Yes. You must have homeowners’ insurance on the property before the lender will pass the money to the seller. There is no way of getting around this one.
At the closing you will be required to present a paid homeowners’ insurance policy, a paid receipt for the policy, or a statement from the insurance company that verifies you purchased the policy. Many insurance companies that write homeowner’s insurance will fax these documents to the mortgage lender prior to the closing. However, bring your copy to the closing just in case there is a question.