I wrote about condominiums and condo insurance last week and this week, I wanted to follow that up with an overview on townhouse insurance. The reason for addressing townhouses as a distinct home type is they have elements of a traditional single family home. They also share something in common with condominiums as they have a mandatory homeowner’s association and are usually found in highly planned communities.
Since a townhouse shares features with both single family homes and condos, there are usually two ways the townhouse insurance can be written. Which one’s the right one for your townhouse depends on who’s responsible for the home’s exterior walls, roof and foundation. This is usually clearly outlined on the association policy.
Once I’ve gathered information about the home from the owner or buyer, I call the person who administers the HOA policy to ask whether it covers the exterior and roof of the town houses in the community, or does it just provide liability coverage for the association. Whenever possible, I’ll request a copy of the certificate of insurance to verify what’s covered by the association policy.
If the association policy only provides general liability and related coverage for the association, I’ll quote a standard home insurance policy which provides coverage for the complete structure of the townhouse including exterior walls, roof, interior finish out and the owner’s personal property and liability. The only thing that differentiates this policy from a traditional single family is the “style” of home which is townhouse as opposed to ranch, Victorian, etc..
The location of the town house may provide a rating difference if located at the end of several homes. In other words, it’s an “exterior” versus an “interior” unit. The presence of a firewall between each home may also make a difference in the home’s insurance rate. Other items which may contribute to a lower rate is if it’s located in a gated community and is equipped with an interior sprinkler system.
If the association policy provides coverage for the townhouse’s exterior walls and roof, then a condo policy is called for. This policy type covers the finish out of the home, or sheetrock in, including the walls, flooring, cabinetry, plumbing fixtures, appliances, and personal property or contents of the homeowner.
Townhouses continue to grow their presence in north Texas, especially in the tear down and rebuild urban areas. I expect this trend to increase over the coming years as lot and home prices continue to rise in the Dallas / Fort Worth metroplex and people who prefer to live closer to work take advantage of mixed development communities. Besides, not everyone likes yard work!
Once I know the answer to what the association policy covers, I can then write the proper townhouse insurance policy. What questions, comments, or experiences do you have you’d like to share? Share them with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!