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How to Insure Your Townhouse Like a Pro
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So you’ve bought yourself a nice little townhome so you can enjoy all the perks of home ownership without any of the lawn mowing? Good call. But townhomes need protection, too, and just as much as single-family homes. The difference, though, is that some things are covered under your association, and some are not.
But first, it’s time to take a closer look at townhome insurance, from the coverages to the requirements and beyond.
What Is Townhouse Insurance?
In short, townhouse insurance covers your indoor space and any outdoor property you possess. If a disaster strikes, or your belongings are stolen, you’ll be covered. But there’s also a liability side to your coverage, too.
And if someone is injured on your property and files a liability claim against you, townhouse insurance can help minimize your risk.
Who Needs Townhouse Insurance?
You may be asking yourself, “Why do I need homeowners insurance on my townhouse?” Well, because you want to protect it, right? And all of the memories and other stuff in it, too.
If you’re reading this article, chances are you’re already a great candidate for a comprehensive townhouse insurance policy. In just about all cases, townhouse insurance is highly recommended.
First, it should be mentioned that it isn’t against the law to not have home insurance on your townhouse. However, there’s a strong possibility that you will need to purchase insurance in order to own one in the first place, for a number of reasons, like:
Did you purchase your townhouse using a mortgage? If so, your lender typically requires you to have homeowners insurance. Which makes sense, considering that the bank wants to protect their investment as well as your own.
Townhouse Owner Requirements
If you own your home outright, and the townhouse isn’t part of a homeowner/condo association (see below), insurance is typically optional — but it’s strongly recommended.
Because basically, townhouse insurance functions as a standard homeowners insurance policy, providing coverage for your personal property, the interior and exterior structure of the townhouse, the land your property is on, and liability coverage should a claim be filed against you.
If you rent a townhouse, you should get renters insurance. Because you don’t own the property, a renters insurance policy covers your personal property (like furniture, big-screen TVs, fancy clothes) and provides liability coverage in case a claim is ever filed against you as a renter. It’s for these reasons that renters insurance is often referred to as “walls-in coverage.”
Landlords are the owners of the property, so a renters insurance policy complements your landlord’s insurance policy. Landlord insurance covers the interior and exterior structural elements of the townhouse.
Considering that most renters insurance policies only cost a few dollars a month while providing thousands in coverage in the event of a claim, having renters insurance is a no-brainer.
HOA/Condo Association Requirements
If your townhouse is in a homeowners association (HOA), condo association, or planned community, then it’s usually standard procedure to purchase insurance that meets the terms of your HOA/condo agreement (often referred to as “HO6 coverage”).
This townhouse association insurance coverage protects your personal property, the interior of your townhouse, and any part of your home that isn’t covered by your association’s group policy.
The group’s policy typically covers any parts of the property that are owned collectively by all of the residents, including:
- Shared hallways
- Amenities, such as:
- Activity spaces
- Exercise rooms
- Hot tubs
- Swimming pools
Also, be sure you know exactly what type of coverage you’re required to have for your townhouse beforehand (including minimum policy limits). This goes a long way toward ensuring that you’re not caught off guard by an unexpected expense or an unplanned disaster.
As an example, your townhouse’s roof may be considered a “shared” resource, and thus covered by your HO6 policy. If damage occurs to the condo’s common property that exceeds the HO6/condo association’s shared coverage limits, the extra expense is split evenly among all residents (known as an “assessment”).
To cover this cost, loss assessment coverage is available to pay for your portion of those extra costs. If that part of your property isn’t shared, then it’s up to you to properly insure it.
What’s Covered with Townhouse Insurance?
As mentioned before, typical townhouse insurance policies mirror the same coverages you would typically find with a homeowners insurance policy (e.g., damage from storms). But you may need to add a few additional coverages, depending on where you live and what else you’ve got going on, like:
- Flood insurance: If you live in a flood-prone area, you should boost your policy to avoid mold and structural damage caused by overflowing water.
- Earthquake insurance: Similarly, if your townhouse is in an area that regularly experiences the shakes, an earthquake insurance policy can help cover repairs to your home’s structure, protection for injured occupants, and your belongings.
- Umbrella insurance: If you feel your standard townhouse insurance policy isn’t comprehensive enough, consider an umbrella insurance policy, which boosts your coverage beyond your initial policy’s limits. If you regularly host a book club for seniors at your home, you may want to invest in umbrella coverage for any claims that may be filed against you.
How Much Does Townhouse Insurance Cost?
Considering that a typical homeowners insurance policy in the United States costs just over $1,000/year, you should be happy to hear that the average cost of homeowners insurance for townhouse policies is typically much less than homeowners insurance.
When compared to a stand-alone house in the same area, townhouse insurance is cheaper, since they tend to be smaller and cover less of the structure.
Like any other insurance policy, there’s a number of factors that influence the cost of townhouse insurance, including:
- Where the townhouse is located
- How much the townhouse is worth
- Crime rates
- Which elements of your townhome’s structure you are responsible for
- How much liability coverage you need (such as more coverage for a heavily trafficked home)
- The value of your personal property and owned assets
- Number of occupants in the home, as well as their age
- And other factors
What’s the Difference Between Condo and Townhouse Insurance?
Townhouse and condominium are commonly used to describe types of homes that are similar in design, but there are clear differences. First, a townhouse is a type of building; a condo is a structure of ownership. This means that your home could be considered simply a townhouse, a condo, or both.
Generally speaking, a townhouse is a single-family dwelling that shares walls with up to two of its neighbors. A townhouse might have anywhere from one to five floors (two to four are the most common designs) with a doorway/entrance facing the street. And it may even have a small front or back yard.
Condominiums, on the other hand, are usually in a shared building complex that contains multiple units. The units are owned by different people in several apartments in a single building, or may be part of several independent buildings.
Further, condominiums have shared common areas and amenities of the property that are paid for, maintained, and insured by all who live in the condominium complex.
The real difference between condo and townhouse insurance lies with cost, since townhouse insurance is more comprehensive than insuring a condominium. But this means you’ll see a slightly higher cost for condo insurance, because there are more risks with a greater number of residents living communally.
Furthermore, condo insurance usually excludes reimbursement for lightning damage, hail damage, and, in many cases, theft.