I can't think of a situation where it wouldn't be required. Your mortgage company has just lent you a bunch of money to buy a home. They need to be sure that, if something happens to the home, it will be restored to what it was before anything happened. They're just protecting their investment.
The bigger question is "why wouldn't you want to insure your home?". You just made a big commitment and have a lot of money on the line. If something happened to your home, what would you do? Yes, premiums for homeowners insurance are high, but not as high as the repairs you'd have to pay for if you didn't have insurance. Plus, it not only protects the house, but everything in the house. Most people don't think they have a lot of money tied up in their "things", but they'd be astonished to find out what it would cost to replace it all.
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The bigger question is "why wouldn't you want to insure your home?". You just made a big commitment and have a lot of money on the line. If something happened to your home, what would you do? Yes, premiums for homeowners insurance are high, but not as high as the repairs you'd have to pay for if you didn't have insurance. Plus, it not only protects the house, but everything in the house. Most people don't think they have a lot of money tied up in their "things", but they'd be astonished to find out what it would cost to replace it all.