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What Home Insurance Policy Should I Buy For a Townhouse?

Buying homeowners insurance for a townhouse depends on whether you purchased the property independently or through a condo association. Generally, people who privately own their townhomes can purchase conventional homeowners insurance and take advantage of its affiliated benefits like dwelling, other structures, and liability coverage.

If you acquired your home through a condo association, your membership fees would cover the exterior and common areas of the building. However, you will need condo insurance to protect everything behind your front door. If you rent your townhome, your landlord is financially responsible for damages to everything except your personal property.

How Home Insurance Works for Townhomes 

Traditionally, homeowners insurance pays to rebuild and repair a home and the surrounding property after fires, windstorms, falling trees, and other predetermined “covered perils.” If you own your townhome independent from a homeowners association (HOA) or condo owners association (COA), you could purchase similarly structured coverage.

Homeowners insurance policies can include supplementary benefits for features other than your primary dwelling, including other structures coverage, personal property protection, and liability coverage. If you pay HOA or COA fees, you may not require one or more of these policies, as the association should pay to repair the building’s exterior, neighboring structures, and shared areas like lobbies, communal yards, and hallways.

Townhomes vs. Condos 

While condominiums and townhomes may appear similar, they have notable differences. A condo can be either an apartment-style or townhome-style living space where residents share common areas, walls, and services. Residents pay membership fees to a COA to keep these areas in check. Furthermore, COA members must purchase condo insurance instead of homeowners insurance for a townhome to protect their personal property and cover gaps in group COA benefits.

While non-condo townhomes still share walls, every resident holds total financial responsibility for their own property and must secure conventional homeowners insurance to guarantee reimbursement following a covered peril.

What Does Homeowners Insurance for Townhomes Cover? 

Traditional homeowners insurance covers damages caused by covered perils listed on your policy. These events can include fire, thunderstorms, vandalism, theft, and much more. After settling on a baseline policy, you can opt into various sub-benefits such as personal property coverage, other structures coverage, and liability insurance to protect your home, family, and belongings.

Dwelling Coverage 

Selecting dwelling coverage limits marks the initiation of a homeowners insurance policy. This covers the costs of rebuilding and repairing the structure of your primary residence, any installed features, and permanently attached appliances following a covered peril. Notably, dwelling coverage will not pay to replace the contents inside your home or any other structure on the surrounding property. 

With townhome insurance, dwelling coverage would cover your portion of the outside structure but not the walls and roof of your adjoining neighbor or any fences, sheds, or other fixtures in your backyard.

Personal Property 

Personal property coverage pays to replace belongings lost, stolen, or destroyed during a covered peril. Eligible items include furniture, electronics, clothing, art, collectibles, exercise equipment, and anything else you independently acquired and stored within your walls. For example, if smoke from a neighboring fire destroyed a rare collection of baseball cards or your favorite couch, personal property coverage would pay up to its limits to replace each covered item.

Other Structures 

Other structures coverage pays to repair or replace other structures on your property like sheds, fences, treehouses, detached garages, guest houses, and even swimming pools damaged or destroyed by a covered peril. For example, if a tree fell through the roof of the toolshed in the backyard of your townhome, you would receive direct reimbursement through your other structures benefits. 

Remember that this coverage only protects the framework of applicable structures, not the contents inside. You must have personal property insurance to receive reimbursement for compromised gardening equipment, tools, and anything else stored in a secondary building.

Personal Liability 

Personal liability insurance absorbs some or all of the financial consequences of a guest or intruder getting injured within the confines of your property. For example, if a friend’s child fell off your trampoline and broke their arm, liability coverage would help reimburse their medical bills and related legal fees.

Notably, personal liability can also pay for damages that you or members of your family cause to other people’s property. Some policies even pay to cover the medical bills of people bit by a family dog in or away from your home.

Loss of Use 

Loss of use coverage, occasionally referred to as additional living expenses (ALE) insurance, pays the unexpected costs of temporary housing needs that might occur if a covered peril renders your townhome uninhabitable. For example, if a fire burned up your roof and kitchen, your ALE policy would pay hotel bills, pet boarding, public transportation expenses, and necessary restaurant services incurred during the reconstruction of your townhome’s exterior walls and kitchen.

Other Optional Coverages to Consider 

Additional benefits available to townhome owners include:

  • Scheduled personal property: Many insurance policies limit reimbursement for high-cost items like jewelry or gold. Securing scheduled personal property insurance on these and other select valuables will ensure total financial protection if lost or damaged in a covered peril.
  • Medical payments: Medical payments insurance helps pay for injuries incurred on your property, regardless of responsibility. These policies have notably lower limits than conventional liability coverage and typically only cover peripheral expenses like ambulance transportation, stitches, and follow-up physical therapy.
  • Umbrella insurance: By increasing your liability coverage in million-dollar increments, umbrella insurance acts as a last line of protection for severe medical and legal bills significantly exceeding your home, auto, or other policy limits.

How Much Does Homeowners Insurance For Townhomes Cost? 

The cost of insuring a townhome varies widely depending on whether you require homeowners, condo, or renters insurance. Likewise, your monthly premiums for each will fluctuate based on chosen supplemental protections and their limits, such as other structures coverage, personal property coverage, and liability insurance. 

Furthermore, every insurance company uses unique formulas to calculate the risk of insuring you. Some companies may levy higher premiums for individuals who live in coastal areas prone to hurricanes or mountainous regions with a history of wildfires. Others put more weight on your claims history or dangerous fixtures on your property, like trampolines, swimming pools, and treehouses.

Likewise, insurance premiums generally shift depending on the size of your townhome, the number of rooms inside, and its overall value. On average, townhome residents who require standard homeowner’s insurance pay $1,298 in annual premiums. Conversely, the national yearly costs of condo insurance average closer to $512, whereas renters insurance falls around $216 annually.

All in All 

Prospective homebuyers in crowded cities sometimes purchase townhomes over traditional standalone properties to help reduce the cost of living and efficiently utilize space. Whether you own your townhouse independently, as part of a COA, or rent from a property management company, you must secure the correct type of insurance to guarantee the necessary funds to rebuild or repair your home following a covered peril. Talk to a licensed agent about affordable townhome coverage options to protect yourself and your family from severe financial loss.

Frequently Asked Questions 

If you are part of a condo association, your membership fees help fund the COA’s overreaching insurance policy for shared spaces like lobbies, gyms, hallways, and laundry facilities. However, if you want additional coverage for the parts of your townhome you specifically own, you must secure a separate condo insurance policy.

COA coverage can get complicated for townhome-style condos. Depending on your COA, they may charge you as responsible for your townhome’s exterior walls, private yard, and roof. While condo insurance costs significantly less than traditional homeowner’s insurance, it does not offer as many coverage options and flexibility. Sometimes, COA members must even purchase loss assessment coverage to absorb damage to common areas that exceed their COA’s limits.

Condo insurance is for members of a COA, regardless of whether their condominiums resemble apartments or townhomes. Conversely, townhouse insurance is another form of homeowners insurance in which independent townhome owners purchase policies based on a list of covered perils they want financial protection against. 

As with homeowners insurance, these individuals can opt into additional protections such as other structures coverage, personal liability protection, and personal property coverage. These additional benefits rarely apply to members of COAs, as group COA coverage should cover incidents and damage occurring within shared areas of the property. 

Responsibility for damage to neighboring townhomes depends on numerous factors, including state-specific laws, how the damage occurred, and whether or not both parties pay dues to a COA. Generally, neighboring townhome owners share responsibility for upkeep and maintenance. For example, if a pipe bursts and causes water damage to a shared wall, you and your neighbor will likely have to split repairs.

However, if your neighbor directly causes the damage, you should have an honest conversation with them about your repayment expectations. You should notify your insurance carrier and let them pursue any expenses the neighbor owes via the subrogation process. If that process fails, then you should send them a demand letter, hire an attorney, and prepare for legal action.

Yes. All renters, regardless of whether they live in a standalone single-family home, apartment complex, or townhome, can purchase renters insurance to protect their personal belongings from covered perils. Covered items can include furniture, jewelry, exercise equipment, electronics, souvenirs, and anything else stored within their primary dwelling or a shared area.

While renters insurance is not legally required, some landlords will ask you to secure a compliant policy as part of your rental agreement. Average renters policies cost around $15 a month and can help absorb thousands of dollars in losses, often proving well with the cost.