Home Insurance Coverage for Townhomes (2024)

Homeowners and renters don’t legally need to carry townhome insurance. Although you don’t have a legal obligation to carry homeowners insurance, your mortgage lender, homeowners or condo association, or landlord could require you to carry homeowners or renters insurance.^[1]

Here’s what you need to know about townhouse insurance.

What does townhouse insurance cover?

When it comes to insurance for your townhouse, the type of policy you purchase will dictate what’s covered. For example, coverage needs look different for owners and renters.

Standard homeowners policies include the following coverages:

• 

  Coverage for the home’s structure

  If a covered event damages your townhome, like a hailstorm or other natural disaster, dwelling coverage will help you pay for repairs. Notably, this protection doesn’t cover floods or earthquakes.

• 

  Coverage for personal property

  Personal property coverage can help you buy replacements for items damaged during a covered event or stolen items. For example, if a fire destroys your closet, your insurer may help you pay for new clothes. But this doesn’t cover exceptionally expensive items, like jewelry.

• 

  Liability coverage

  If someone sues you for property damage or bodily injuries, liability coverage can help pay for your legal defense.

• 

  Additional living expenses

  Also known as loss of use coverage, additional living expenses coverage helps you pay for a comparable living situation if your house incurs damage that makes it temporarily unlivable.^[2]

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If you’re the owner of your townhouse

If you own your townhouse, you’ll need a standard home insurance policy. While this isn’t a legal requirement, mortgage lenders often require borrowers to carry this coverage. Even if you’ve paid off your townhouse, you can still choose to protect this important asset with a townhouse insurance policy.

A standard homeowners insurance policy will include coverage for the structure of your home, personal belongings, liability coverage, and additional living expenses. This is the same type of coverage available for single-family homes.

If your townhouse property is part of a homeowners association

If your townhouse is part of a homeowners, condo, or townhouse association, your HOA will have a master insurance policy that covers shared spaces. But you’ll likely still need to get your own insurance to cover what the master policy doesn’t.

Your personal condo or homeowners insurance policy should include coverage for structures not covered in the master policy, your personal possessions, liability coverage, and additional living expenses.

Before getting condo insurance, find out what your HOA’s insurance policy covers. The coverage included in the overarching policy will influence what coverage you need.^[3]

If you rent a townhouse

If you rent a townhouse, your landlord might require you to buy a renters insurance policy. You can also choose to purchase this type of policy to protect yourself, even if your landlord doesn’t require it.

A standard renters insurance policy should include coverage for personal possessions, liability, and additional living expenses. You don’t need coverage for the home’s structure.^[4]

How much townhouse insurance do you need?

The amount of townhouse insurance you need depends on your unique situation. Use the tips below to determine the levels of coverage you need.

• Dwelling: Ideally, you should have enough coverage to rebuild your house if a covered event completely destroys it. The price to rebuild your home will depend on the house’s location, features, and size. If you need help determining this overall number, consider asking an insurance agent.

• Personal property: Most insurers offer to cover 50% to 70% of the replacement cost of damaged or stolen items. You can decide how much coverage you need by doing a home inventory, which involves estimating how much your items cost.

• Liability: Liability insurance limits typically start around $100,000, but experts recommend that homeowners purchase between $300,000 and $500,000 in coverage. Some reasons to increase your coverage include owning a dog, regularly hosting parties at your house, and having significant assets that someone could target in a lawsuit.

• Additional living expenses (ALE): Limits vary by company, but it’s common for ALE coverage to equal about 20% of your home’s insurance.^[5]

Condo vs. townhouse: What’s the difference?

A townhouse is a building structure that shares one or two walls with neighboring units, while condos are typically units within a larger building. Unlike condos, which have common areas for all complex residents, townhouses have land, which can include driveways, front and backyards, and detached or attached garages.

When you own a condo, you only need condo insurance for the interior of the unit. In contrast, if you own a townhome, you’re responsible for obtaining home coverage for the interior, exterior, and land beneath it.

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How much home insurance costs

On average, townhome owners with $200,000 in dwelling coverage pay $1,604 per year for a homeowners insurance policy. But the exact cost you pay varies based on the location and details of your coverage.

The table below highlights the average cost of townhome insurance by insurance company.

How insurers calculate the cost of townhouse insurance

Every insurance company has a slightly different method of determining rates. Here are some factors that commonly affect home insurance premiums.

• Location: The location of your townhouse can make all the difference. A neighborhood with low crime rates and limited bad weather might lead to cheaper rates.

• House features: The cost to rebuild your home increases if it has special features, which can increase your insurance premiums.

• Deductible: Opting for a higher deductible can lower your homeowners insurance costs. Make sure you can pay the deductible from your savings if you need to file a claim.

• Discounts: Many insurers offer a suite of discounts. For example, if you purchase other insurance products through the same company, you could score a bundling discount. Don’t be afraid to ask about discount opportunities.

• Credit history: In general, insurers offer lower rates to homeowners with a good credit history.^[6]

Townhome insurance FAQs