How to Insure a Townhouse

Buying a townhouse can afford you the benefits of not having to perform exterior maintenance such as shoveling. However, townhomes need protection, and just as much as single-family homes. Townhouses are just as vulnerable to weather elements, vandalism, and other threats as any other type of home. The difference, though, is that some things are covered under your association, and some are not.

Townhouse insurance helps homeowners enjoy peace of mind and a sense of security within their home, knowing that it’s protected. An independent insurance agent can help you get set up with the right townhouse insurance for your unique needs. But first, let's 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 up to your policy's limits. But there's also a liability side to your coverage, too. Also, if someone gets injured on your property and files a liability claim against you, townhouse insurance can help minimize your risk.

Regardless of where your particular home is located, townhouse insurance is essentially an agreement between the townhouse owner and an insurance company in which the insurer agrees to cover financial losses relating to damage and liabilities. Only the specific perils stated in the policy will be covered by the insurance company. Townhouse insurance is designed to help protect owners from losing their homes should disaster strike.

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. In just about all cases, townhouse insurance is highly recommended.

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, such as:

Lender Requirements

Did you purchase your townhouse using a mortgage? If so, your lender will typically require you to have homeowners insurance. This 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.

This is because 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.

Rental Requirements

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 (e.g., furniture, big-screen TVs, expensive 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, it's usually a standard procedure to purchase insurance that meets the terms of your HOA/condo agreement (often referred to as “HO-6 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
Roads
Pathways
Elevators
Activity spaces

Exercise rooms
Hot tubs
Saunas
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. As an example, your townhouse’s roof may be considered a "shared" resource, and thus covered by your HO-6 policy. If damage occurs to the condo's common property that exceeds the HO-6/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. An independent insurance agent can help review your townhome association's agreement and steer you towards affordable and comprehensive coverage that meets both your needs and the association's.

What’s Covered with Townhouse Insurance?

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, such as:

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 earth movement, an earthquake insurance policy can help cover repairs to your home’s structure and 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 liability coverage beyond your initial policy’s limits.

The typical coverages offered by townhouse insurance that you generally also find in home insurance are:

Dwelling coverage: This townhouse insurance aspect covers your unit’s structural components like the walls, ceilings, and floors.
Personal property coverage: Covers your personal belongings like furniture, clothing, electronics, knickknacks, silverware, etc., that are stored within the unit for perils such as fire or theft. Property stored off-premises, such as in a storage unit, is often covered as well but comes with a lower limit.
Liability coverage: Covers legal expenses such as attorney and court fees in the event you get sued for bodily injury or property damage to a third party. Settlements you’re ordered to pay if you lose the case are covered as well. Coverage extends to all members of the family living within the townhouse, including pets.

To be completely sure your home is properly covered against all threats, speak with an independent insurance agent. They'll help you get a townhouse insurance policy that includes all the coverage you need.

What Doesn't Townhouse Insurance Cover?

Like every other kind of insurance out there, townhouse insurance comes with a list of specified covered perils, as well as non-covered perils. Becoming familiar with what your townhouse insurance policy doesn’t cover can save you the hassle of filing claims that are bound to get denied, and in the event of certain non-covered natural disasters, help you find the right kind of policy to protect your home.

Townhouse insurance does not cover the following perils:

Certain natural disasters (i.e., floods, earthquakes, and mudslides)
Maintenance-related losses
Wear and tear damage (i.e., failure of the homeowner to maintain upkeep)
Insect damage or infestations
Damage from war or nuclear fallout
Business-related liability

If you run a business out of your home, townhouse insurance won’t cover any liability-related mishaps. To protect your unit against flood or earthquake damage, you’ll need flood insurance or an earth movement policy. Townhouse owners located in areas prone to flooding may want to seriously consider getting a policy.

How Much Does Townhouse Insurance Cost?

Considering that a typical homeowners insurance policy in the United States costs about $1,211 per year, you might be happy to hear that the average cost of 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. But like any other insurance policy, there are 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

While it’s hard to offer an exact figure without knowing your unique living situation, your townhouse insurance policy’s premium may fall anywhere from the low hundreds to just over a thousand annually. Unless you’re buying a particularly expensive townhouse in a major city, though, you can typically expect to pay towards the lower end of the range for coverage. An independent insurance agent can help you find more exact quotes.

What's the Difference between Condo and Townhouse Insurance?

The terms "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, while 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 with a doorway/entrance facing the street. It may also 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 insurance 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. Additionally, note that condo insurance usually excludes reimbursement for lightning damage, hail damage, and, in many cases, theft.

What about Townhouses that Are Condos?

Sometimes a townhouse isn’t just a townhouse, it’s also a condo. If your townhouse belongs to a homeowners association or condo association, then you might need a slightly different kind of insurance policy due to your increased responsibilities as a homeowner.

Owners of townhouses that are also condos are responsible for covering a percentage of property located in what’s known as “common areas,” as well as their individual units. This property may include shared hallways, roads, sidewalks, elevators, gyms, and any other shared/community rooms or facilities.

If you’re confused about what kind of coverage you need, talk to your independent insurance agent. They’ll be able to get you set up with the right type and amount of coverage for your specific townhouse, even if it is technically a condo.

What Are the Benefits of Townhouse Insurance?

Your townhouse is more than just the place you hang your hat, it’s also your personal sanctuary and it deserves the proper protection. Having adequate insurance coverage can prevent a townhouse owner from going bankrupt and losing their home following a particularly costly disaster. Standard townhouse insurance packages provide coverage for many common threats to the home.

Townhouse insurance often provides coverage for the following perils:

Theft
Vandalism
Explosions
Fire and smoke
Water damage
Aircraft or vehicle damage
Riots
Falling objects and trees
Certain natural disasters (i.e., windstorms, hail, lightning, and blizzards)

Your independent insurance agent can help you review your townhouse insurance policy to answer any remaining questions about your coverage. They’ll also be able to help you figure out whether you’ve got enough coverage, or if you should purchase more.

Why Work with an Independent Insurance Agent?

Independent insurance agents simplify the process of shopping for and comparing townhouse insurance. They'll explain the complex terms for you, cut through the jargon, and make sure you understand the fine print.

But most importantly, they work for you, not the insurance company. That means they can compare insurance products from many companies and pick the ones that are right for you at the best possible price. They’ll also be there for you in the future if your needs change or questions arise.

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