What insurance do I need for a condo or townhome?

You own a condo or townhome and might be unsure what you need for coverage. Condo and townhome insurance is usually different than insuring a single family home. Your Homeowners Association (HOA) will cover the exterior of the home for damage. That’s part of the reason you pay your HOA each month. Common exterior damage includes roof and siding damage.

Since the HOA covers the exterior of the home, condo insurance is inexpensive compared to a standard single family home. The technical insurance term for the condo or townhome policy is HO-6 insurance.

Here is a breakdown of the main coverage on your policy:

Dwelling Coverage – This coverage will repair the interior for a covered loss. The interior of your home consists of the drywall, flooring, kitchen cabinets and bathroom fixtures. Essentially, anything that is attached in the home makes up the Dwelling Coverage. Most people will carry this coverage at least 25% of the value of the home.

Personal Property – Coverage for your personal belongings for a covered loss. This is coverage to replace your items in the home including clothing, furniture, jewelry, electronics and unattached appliances. The amount of coverage can vary for each person and home. A starting amount of coverage is usually at $25,000 but it is common to have a higher amount. You should let your insurance agent know if you have expensive jewelry, electronics, firearms, antiques or collections.

Liability – This is an important coverage in case you are negligent. The minimum amount of coverage is $100,000 but $300,000 is, by far, the most popular amount. The coverage could pay for things like: water or smoke damage to a neighbor’s unit or if a guest is visiting and falls down your stairs because you didn’t have a handrail.

Loss Assessment – A very inexpensive but often overlooked coverage. The HOA has a right to place a Loss Assessment on each unit owner. The most common occurrence is for roof replacement on all of the buildings. If the HOA has a high insurance deductible on their master policy or is lacking funds in their reserve account, they will place a loss assessment on each unit owner. This coverage could save you thousands of dollars and will cost around $1 per month.

In general, you want to get as much coverage as you can comfortably afford. As always, we are here to help you select the correct coverage levels. This is a high level analysis of the condo and townhome policy. Please contact us with additional questions or a free insurance quote to get the best deal.