What You Didn't Know: Insuring A Townhouse Vs. A Condo


Insuring A Townhouse Vs. A Condo Is More Complicated Than You Think

It doesn’t take a rocket scientist to understand that insuring a townhouse vs. a condo is different than insuring a regular home, but what exactly does your townhouse or condo insurance cover? Every insurance policy, including coverage, is different. If you just have a basic insurance plan, you might be at risk if you're underinsured. Here’s what you didn’t know about insuring your townhouse or condo.

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You Might Not Own The Land

Land Ownership Insuring A Townhouse Vs. A Condo Do you know the difference between a townhouse and condo? Those who don’t own a townhouse or condo probably can’t tell, but it’s important to know in order to get the right insurance. Simply put, a townhouse owner has sole ownership of the land under their property, while a condo owner shares ownership of the land with other condo owners in their complex. So, while townhouse owners are sometimes responsible for insuring the exterior of and land under their homes, condo owners usually have homeowner’s association (HOA) to pay for that insurance.

You Have Policy Options

Policy Options Insuring A Townhouse Vs. A Condo As a townhouse or condo owner, you might think you only have one insurance coverage option: an HO6 policy. This policy is specifically designed for townhouse and condo owners with shared walls. An HO6 insures the interior of a home against sixteen perils listed in an HO2, including fire, lightening, falling objects, windstorms, and hail. The HOA insures the rest. But an HO3 policy, which is primarily for single family homes, is also an option for townhouse and condo owners. Unlike an HO6 policy, an HO3 policy covers both the inside and the outside of your home. An HO3 insures just as much of the interior as an HO6 does, but it also covers the exterior (walls, window, roof, etc.) against everything except the events specifically excluded from the plan. This extra coverage makes it a great option for townhouse and condo owners that want to beef up their current insurance plan.

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You’ll Need Additional Coverage

Additional Coverage Insuring A Townhouse Vs. A Condo Just like a regular home insurance plan, you’ll need additional coverage against more frequent, but less insured disasters. Take, for example, earthquake insurance, which all homeowners in California should have. Neither an HO3 nor an HO6 covers earthquake damage. You can either get this coverage through your HOA or purchase it yourself. Ignoring natural disaster insurance could result in a total loss, so don’t avoid purchasing it. Many townhouse and condo owners are underinsured. When disaster strikes, these owners won’t be able to recover their losses. Don’t be one of these owners. Educate yourself on the type of insurance you need before purchasing a townhouse or condo.
Date of original publication:
Updated on: November 10, 2015

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