What Sets Townhome Insurance Apart? A Guide for Owners

Understanding townhome insurance can be tricky.

​Learn how it differs from traditional homeowners insurance and what you need to look for in your coverage.

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When you purchase a townhome, your insurance needs don’t quite fit into the traditional mold of a single-family home or a condo. Townhome insurance exists in its own category, and understanding how it works can save you time, money, and a whole lot of stress.

Whether your townhome is part of a larger community with an HOA or a standalone unit, this guide breaks down what sets townhome insurance apart, why it's necessary, and what to watch out for when selecting coverage.

1. What Is a Townhome?
A townhome (or townhouse) typically shares one or more walls with neighboring properties but has its own private entrance and may span multiple stories. In many cases, townhomes fall somewhere between a condo and a single-family home in terms of ownership responsibilities.

2. Townhome vs. Condo vs. Homeowners InsuranceInsurance Type

• Condo Insurance (HO-6): Covers just the interior. The condo association’s master policy handles the exterior.
• Townhome Insurance: Varies depending on the HOA agreement. If the HOA insures the exterior, you may only need an HO-6 policy. If not, you’ll likely need an HO-3 policy that covers the full structure.
• Homeowners Insurance (HO-3): Covers the entire property and structure, both inside and out.

3. Understanding HOA Master Policies
Before buying insurance for your townhome, request a copy of the HOA’s master policy (if applicable). Some townhome communities carry “walls-out” coverage, meaning the association insures everything up to the drywall. Others offer “bare walls” coverage, where the homeowner is responsible for the interior finishes, appliances, and sometimes the roof and exterior.
Knowing what the HOA covers determines whether you need:

• An HO-3 policy (if you’re responsible for the exterior)
• Or an HO-6 policy (if the HOA covers the structure)

4. Key Coverages in a Townhome Insurance Policy
Regardless of your HOA’s role, your policy should include:

• Dwelling coverage: Protects your home’s structure.
• Personal property: Covers your belongings inside the home.
• Liability protection: Covers injuries or property damage to others.
• Loss of use: Helps pay for temporary living expenses if your home is uninhabitable.
• Medical payments to others: Covers minor medical expenses for guests injured on your property.

5. Optional Add-Ons to Consider

• Water backup coverage: For sump pump or drain backups.
• Equipment breakdown: Covers major appliances or HVAC systems.
• Scheduled personal property: Extra coverage for high-value items like jewelry or collectibles.
• Flood or earthquake insurance: Not included in standard policies but may be necessary depending on your area.

6. Why Proper Classification Matters
Incorrectly classifying your townhome as a condo or home can lead to coverage gaps. You could end up underinsured for the structure or overpaying for coverage you don’t need. Always clarify with your insurance agent which type of policy fits your ownership structure.

7. How Much Does Townhome Insurance Cost?
Costs vary based on:

• Location
• Coverage type (HO-3 vs. HO-6)
• Claims history
• Deductibles
• Construction materials

Generally, townhome insurance is less expensive than standalone homeowners insurance but more comprehensive than condo insurance.

Carrier-Specific Notes
Many national carriers like Progressive, Safeco, and Allstate offer townhome-specific coverage options. Be sure to:

• Ask your broker how your policy matches the HOA's coverage.
• Review endorsements to fill any gaps.

Final Thoughts
Don’t make assumptions when it comes to your townhome coverage. Always review your HOA policy, talk to your insurance advisor, and ensure you have the right form (HO-3 or HO-6). Taking these steps can save you thousands in the event of a loss.

Disclaimer: Coverage and terms vary by carrier and location. Speak with a licensed insurance agent to confirm the best policy for your property and HOA structure.