HOA fees for a townhome typically don’t cover insurance for your unit.
If you have a mortgage on your townhouse, you’ll likely be required to carry some form of homeowners insurance. Even if you bought your townhouse with outright, you may want to maintain some coverage. Why?
Your HOA is also not responsible for the inside of your townhome or your personal belongings. If there is a fire in your kitchen, for example, your HOA fees wouldn’t cover the cost of repairing your stove or ceiling!
What does your HOA Fee Cover?
Many townhouse communities require each unit owner to pay a homeowner’s association or HOA fee; these fees are used to maintain shared areas of the property. HOA fees might also pay for what is called an association master insurance policy. This insurance policy covers the cost of damages to common areas of a townhouse complex, such as an office or that billiards room.
If you own a townhouse it’s vital to understand these details about your HOA fees and various insurance policies so you know what coverage you should maintain for your home. Note a few important features and details of insurance for a townhouse and how these policies are different than those for condominiums, and which policies you should consider maintaining.
Townhouse dwelling insurance
One difference between townhouses and condos is that the HOA for a condo complex is typically responsible for repairs to the outside of a building. As an example, if the roof of a condo building is damaged during a storm, the HOA is often responsible for repair costs.
In turn, condo owners typically only need what is called walls-in insurance. A walls-in policy would cover damage to drywall, carpeting, and interior ceilings, but not to the roof of a building.
Unlike a condominium, the HOA for a townhouse complex is rarely responsible for repairs to the outside of each townhouse, including its roof, gutters, and lawn.
A townhouse owner is typically responsible for maintaining the outside of their structure and their private yard, just like a standard house, so their insurance policy needs to cover damages to the outside of their structure as well as the interior. This is typically true even if your townhome is attached to units on both sides; your insurance typically still needs to cover damage to outside walls, your portion of the roof, and so on.
Dwelling or Structure coverage, as the name implies, refers to the actual building structure itself, including anything permanently affixed to its framework. Items considered permanently affixed include:
- Tile or hardwood floors
Personal property insurance
Townhouse insurance covers damage to a townhome but not the personal property inside that home! Homeowners insurance, townhome insurance, and even walls-in insurance provides coverage for what is called “structure” only.
Personal property insurance provides coverage for “content,” meaning items inside but not permanently affixed to the structure. Personal property insurance covers damage to items such as:
- Kitchen appliances
- Light fixtures
- Clothes and accessories
- Bedding and linens
- Window treatments
- Area rugs and artwork
- Televisions, computers, other electronics
It’s important to understand these differences as items plugged into a wall or even wired into the home, such as light fixtures, are not considered “structure.” Damage to these items is only covered with personal property insurance, not your townhouse insurance itself.
Your HOA fees might pay for liability insurance for common areas on the townhouse property itself. If someone were to skid on ice in a parking lot and run their car into a light post, or a child were to get injured on the property’s shared playground equipment, the HOA’s liability insurance would reimburse their medical bills and property damage costs.
However, an HOA’s liability insurance does not cover accidents on your property, which is why you might consider a liability insurance policy for your townhouse. If someone were to fall inside your home or injure themselves on a swing set in your yard, for example, the HOA is not liable for their medical bills. Your personal liability insurance policy would cover the costs of those injuries or other damages.
If you have a mortgage on your townhouse, your lender will usually require you carry some type of homeowner’s insurance even if you pay HOA fees. If you default on your loan, the lender has the legal right to sell your townhouse and recoup the remaining mortgage amount. Townhouse insurance helps protect the condition of that home so it can be resold if needed.
If your lender requires you to maintain insurance, they might require you to keep a certain amount of insurance coverage but you can typically buy insurance from the provider of your choice. Also, note that it’s good to consider additional insurance coverage options even if they’re not required by your lender or HOA, to ensure you’re covered adequately in case of an emergency.
How to decide on insurance coverage options
It’s important for a townhouse owner to understand what is covered with their insurance and what does not fall under their homeowner’s policy! Ask your insurance agent what is considered “content” in your home, so you know what is and what isn’t covered by your townhome insurance.
To decide if you need personal property insurance and how much, go from room to room and make an inventory of all your kitchen appliances, furniture, linens, clothes, and electronics. Note how much it would cost to replace those items, or even just one room of your personal belongings! Chances are it’s good to have some type of personal property coverage even if you don’t own a lot of high-end items.
A homeowner should also never forego liability insurance, as just one minor slip and fall or other accident in your home can result in thousands of dollars of medical costs for a visitor. Without liability insurance, you would typically need to pay those costs out of your own pocket, and someone might even sue and ask for a lien on your townhouse until their bills are paid. Never assume that such a disaster couldn’t happen to you but consider adding liability insurance to your coverage.