There’s an old saying, “If it walks like a duck and quacks like a duck, then it’s a duck.” That isn’t always the case when it comes to a town house. From an insurance standpoint, sometimes a town house is a house and other times it’s a condo. It really depends on the homeowners association and their insurance policy.
Most town house communities, whether a few units or hundreds, have an insurance policy for the homeowners association. The association policy will be set up in one of two ways; it will either provide coverage only for common areas (sidewalks, entrance, exterior stairs, etc.) and general liability for the association, or it will cover the homes’ exterior walls, roofs, and more, in addition to the common areas.
To find out which kind of policy the association has, I always ask either the buyer / homeowner and association member two questions:
- Who owns the dirt underneath the foundation of the townhouse?
- Who’s responsible for repairing damage to the home’s exterior and roof if it’s damaged from a hail storm?
A home policy is written for the town house when the homeowners or buyer own the lot it sits on and are responsible for the home’s exterior if it’s damaged. It’s exactly the same policy as I write on a single family home. Coverage is provided for the home’s exterior, interior, exterior, contents, framework, etc. (see https://wiseinsurancegroup.com/home-insurance-buyers-guide/).
Many of the town house communities that have been built across north Texas the last 5 plus years have changed the type of association policy they purchase. More and more have begun to obtain policies which provide coverage for the exterior of all the homes, just like a condo policy. In these cases, the association policy covers:
- The roof & building’s exterior façade
- The building’s structure (framework, wiring & plumbing)
- The foundation
- All common areas (sidewalks, parking, clubhouses, etc.)
When the association policy provides this type of coverage, the town home is insured with a condo policy which covers from the sheetrock in. That means we’re focusing on what it would cost to replace the interior of the home including;
- Sheet rock, paneling, mill work
- Flooring (wood floors, tile, carpet, etc.)
- Plumbing, lighting & electrical fixtures
- Cabinetry
- All personal property
For more information refer to our post, https://wiseinsurancegroup.com/an-overview-of-texas-condo-insurance/.
I confirm what coverage is needed with the mortgage company, as well as with the property manager or home owner’s association representative. Getting the right coverage up front helps me to propose the right solution to the buyer and them from paying for coverage that’s not needed.
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