This article is concerned with insurance belonging to the group of financial insurance connected with mortgage lending. It is used in many countries but it not fully operational on the Polish mortgage market. The issue of appropriateness of its introduction to the Polish financial system is arising more and more frequently. The first part of the article presents two types of mortgage insurance. Then, the article discusses the very idea of insurance against borrower's default as well as the reasons and objectives of underwriting of mortgage lending. Further part of the article outlines the procedure of providing insurance coverage of lending transaction and discusses types of insurance against borrower's default used in selected countries. These insurance types have been divided from the point of view of the amount of principal covered by insurance and the legal status of insurance companies offering mortgage default insurance. In its subsequent part, the article sets forth the conditions necessary to introduce insurance against borrower's default to the financial market and provides the examples of the use of this insurance in selected countries. Final part of the article attempts to specify the conditions of introducing the discussed insurance to the Polish system of real estate financing with mortgage loans and the potential ensuing benefits.