Townhome Living? Don’t Make This Common Insurance Mistake
Moving into a townhome can feel like the best of both worlds: the privacy of a home with the shared perks of a community. But when it comes to insurance, it’s not always clear where your responsibility ends and the homeowners association’s begins. And if you don’t check the fine print, you could be left holding the bag for tens of thousands in unexpected repairs.
Let’s break down how to navigate townhome insurance so you’re not caught off guard.
Start with the HOA Bylaws: Know What You’re Responsible For
If you live in a townhome governed by a homeowners association (HOA), your first step should be to grab a copy of the association’s bylaws. Why? Because every HOA draws a different line between what the association covers and what the homeowner is expected to handle.
Key questions to answer:
- Does the HOA cover the structure itself (roof, exterior walls, foundation)?
- Or are you only responsible for the interior (drywall, appliances, flooring)?
This can vary widely. Some HOAs insure the entire exterior structure, while others cover just common areas and expect you to insure your portion of the building, even the roof.
If the answer isn’t crystal clear, ask for clarification. It’s better to feel like a squeaky wheel now than pay out of pocket later for a $15,000 roof repair you thought was covered.
Get Your Hands on the Master Insurance Policy
Once you’ve reviewed the bylaws, take it a step further and request a copy of your community’s master insurance policy. This is the actual document that outlines what the HOA insures, and just as importantly, what it doesn’t.
Bring this policy to your insurance agent. Their job is to sniff out exclusions and red flags, especially when it comes to deductible limits. For example, many policies carry high deductibles for certain kinds of damage. In some communities, the water damage deductible can be as high as $50,000. That means if your unit floods, you’d be on the hook for the first $50K before any coverage kicks in.
That’s not pocket change. Knowing this could change how much personal insurance you buy, or at least make you double-check if you’re prepared for that kind of risk.
Less Coverage Doesn’t Always Mean Less Cost, Until It Does
The good news? In most cases, townhome owners end up paying less for their insurance than traditional single-family homeowners. Because many associations do cover structural elements, your personal policy (often called an HO-6 policy) might only need to cover the interior of your home, your belongings, and liability.
But that lower premium can be misleading. If you’re underinsured or misunderstanding what’s covered, you could find yourself in a costly bind when disaster strikes. Worse, you might assume you’re protected until it’s too late.
Think of it this way: you’re not just insuring your home, you’re insuring against uncertainty. A cheaper policy isn’t a deal if it doesn’t protect you when it matters most.
So, What Should You Do?
Here’s a simple action plan for townhome buyers or new residents:
- Read the HOA bylaws. Don’t just skim, look for what’s covered structurally.
- Request the master insurance policy. Your insurance agent needs this to fill in the gaps.
- Watch out for high deductibles. Ask specifically about exclusions for water, wind, or storm damage.
- Customize your policy. Don’t assume a standard homeowners policy fits your needs.
- Ask questions. If anything is unclear, speak up, either with your HOA or your agent.
Don’t Leave It to Chance
Living in a townhome is a great option for many, but the insurance landscape is more complex than it seems. The biggest takeaway? Protection starts with knowledge.
When was the last time you reviewed your policy? Could you afford your deductible tomorrow if disaster hit?
A little homework now could save you thousands later. Read the fine print. Ask the tough questions. And make sure your home and your wallet are fully protected.