A friend of mine sent me an email last week asking me to provide her with an insurance quote for her new townhouse that’s under construction in Plano, Texas. She’s looking forward to moving into her new home in April once everything’s finished. In order to provide her with the right kind of townhouse insurance, I needed to know one thing, what does the homeowner’s association insurance policy cover?
Townhouse insurance can be written in one of two ways, either as a single-family home or as a condo. The key to knowing which way to write the policy is determined by the homeowner association policy.
Single Family Home Coverage: When the association policy does not provide coverage for the townhouse roof, exterior walls, and foundation, the townhouse insurance will be written using a single-family home policy. This means the policy covers the entire structure (roof, exterior siding, foundation, interior finish out, etc.), as well as, the owner’s personal property or contents.
Condo Coverage: If, however, the homeowner association covers the townhouse’s roof, exterior walls, framing, and foundation, a condo policy is used. This is because the HOA policy covers everything but the walls, or sheetrock, in. A condo policy provides coverage for the interior finish out (sheetrock, fixtures, floor coverings, cabinetry, etc.), as well as, the owner’s personal property. Interestingly, more and more townhouse communities are taking this approach with their association insurance policies.
The one option that is important to add in this instance is the homeowner assessment coverage. As I mentioned last week (see https://wiseinsurancegroup.com/important-condo-insurance-option/), this coverage protects the townhouse owner in the event they are assessed for an association claim such as having to replace the roofs after a major hail storm.
Confirming this for my friend simply took me contacting the HOA member responsible for the association’s policy. They confirmed my friend only needed a condo level policy, not a single-family home policy. Providing her with the right policy means I didn’t write the wrong policy leaving her with too much or too little coverage. It also meant a significant savings, somewhere between $500 and $1,000 a year which made her very happy!
What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!