Home Insurance For Townhomes And Condominiums


Keeping Your Unit Insured

Insurance for condominiums and townhouses is not the same as insurance for standard homes.Unit owners are different than renters and have other factors to consider while looking at insurance policies. While there are many similarities to owning a home, there are also enough differences and misconceptions that it’s important to cover any potential gaps in the insurance policy. Condos and townhomes are individually owned units that are part of a larger collection of similar structures. Owners are collectively responsible for common areas like the exercise rooms, pool, lawns, etc., with a homeowner association composed of an elected board of directors who oversee policies regarding rights and obligations of the people that live there.  An owner of a townhouse or condo is one part of a whole who shares ownership of the property and pays fees that are used for upkeep and maintenance. Living with a homeowner association has some advantages and might be beneficial for the person that wants structure and assurance that the property will be taken care of, but bad for the person that wants to display his undying love of Star Wars with a 10-foot Yoda mural on the garage.

SEE ALSO: Rental Insurance Vs. Home Security System

Insurance Coverage

The homeowner association controls the insurance coverage for all the property in what is called the master policy. This policy covers all units and structures. It’s important to check the master policy to understand exactly what it covers because it does not cover everything. Most master policies just cover the walls and floors, which means you will have to take care of everything else – appliances, cabinets, drywall, fixtures, tiles, countertops, wall décor, etc. This also means that you will have to cover any upgrades or additions to the property as well as any belongings.  Check your association documents as the master policy might not identify every part in detail. Usually the declaration, found in the association documents, spells out which parts of the structure are insured under the master policy and which parts the owner is responsible for. Don’t assume that the master policy will take care of you. There will be gaps that will make it necessary to purchase a policy to protect your interests.

Getting Covered

A new policy often called HO-6, or homeowner’s form 6, has been created to meet the needs of condo and townhome owners. Like homeowners insurance, there are six major parts of an owner’s policy:  a) damage to residence, b) damage to detached structures, c) damage or theft of property, d) additional living expenses, e) non-vehicle personal liability, and f) guest medical protection.

Two Kinds Of Assessments To Consider And How To Protect Yourself

Loss assessment occurs when the association doesn’t have enough money to pay the bills. If someone drowns in the community pool and the insurance doesn’t pay the full amount of the claim, the rest is split between the residents. Fortunately, loss assessment coverage is cheap. Deductible assessment coverage helps you when the association makes a unit owner pay the master policy deductible. If an owner caused the loss, or if the claim is limited to a single unit, the association will likely make that unit owner responsible for the master policy deductible. This sounds like a sneaky way for the association to make you foot the bill. The reason is that most policies will cover assessments that are made across the entire association, not against a one unit owner.

SEE ALSO: Home Insurance Advice: Why You Need Umbrella Insurance

Questions for Review

Here are a few simple questions to ask to make sure you have the proper coverage:
  • What exactly does my association cover?
  • What are my responsibilities as an owner?
  • What is the cost of replacing my property or repairing damage?
  • Is there flood or earthquake insurance?
  • Is there loss assessment of deductible assessment coverage?
Each association is different, so never assume anything and read the master policy to know where you stand.
Date of original publication:
Updated on: November 10, 2015

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