An important part of purchasing a townhome, whether it is to turn the next property into your new home or another source of income, is insurance coverage. Even when it sounds like a small element, it will allow you to protect the property and all your belongings. That’s why you need to understand how the townhouse insurance coverage works.
Most people prefer buying a townhouse over a detached property because it is a cheaper way to enter the market. But, there is one big difference between these two types of homes. While in a detached house, you have complete privacy, in a townhome you share all your sidewalls with your neighbour.
Thanks to all the characteristics of the townhouse, there is also special insurance coverage for these types of properties. You can either buy renters, condominium or homeowners insurance. The kind of townhouse insurance you end up buying will ultimately depend on the status of your property and what you decide to do with it.
Townhouse vs Condominium: What’s the difference
Before you purchase any townhouse insurance coverage, you need to know the status of your property. This means whether it stands alone or is part of common ownership. If you are confused right now, don’t worry, just bear with us.
A townhouse, as we already know, is a structure that shares walls with other property. If you want to check out the best urban townhomes to give you an idea of what we are talking about, go to Paradise Developments.
Depending on where you buy the townhouse, you can have a property semi-detached that you own with your neighbour, or it could be part of a condominium. The majority of people think that a condo only refers to an apartment building, but that is not true. We call a development a condominium when we refer to the type of ownership.
A condominium is created when a developer builds, for instance, builds a series of sets of townhouses that form a condo corporation where he/she owns all the properties. After a sale, the townhouse resident will own a part of that whole corporation. In the end, when there are no more properties available, the ownership will be completely in the hands of the residents.
Usually, when properties are classified as condominiums, the homeowners have common areas they are responsible for, such as a gym, swimming pool, a playroom for kids, among others.
Townhouse vs Condo Insurance
Now that we understand that a townhouse has two types of ownership, either as a part of a condominium or you being the sole owner of the property, we can take a look into your insurance options.
Townhouse vs condo insurance has several differences in regard to the type of coverage you will get. First, keep in mind that is not mandatory by the law to purchase any type of insurance for your property, but most of the time lenders will need you to get one. Or if you are part of the condominium, insurance will be part of the requirements to own the property.
If we own a condo, what type of insurance do we need? This is a common question that most homeowners have, and the answer is very simple, condo insurance. Condo insurance usually covers all the common areas that you will be sharing with the other residents plus your unit in case there is an unfortunate accident such as a fire. It will also cover your personal property and the whole interior of your home.
Then you might be wondering what is the difference between a townhouse vs condo insurance. Well, it’s what they cover. For instance, some condo insurance doesn’t cover your external walls, roof or the land where your property sits. To cover those gaps, you can buy different policies.
However, these policies will ultimately depend on what the condo insurance covers. That’s why you need to carefully read your townhouse insurance coverage to make sure which parts of your home are still in need of some protection.
In the end, if you ask an expert “we own a condo, what type of insurance do we need?” The right answer will be condo insurance with policies to cover the rest of your home.
This is the type of townhouse insurance coverage you are going to need if you own your home outright, which means you are not part of a condo association. In this case, you will have to purchase a homeowner’s insurance policy. Since you are not part of any association that gives you any coverage, you will have to look for policies that protect the land where your house is built, the structure of your home and your belongings.
Even when you will have to purchase the same insurance policy that applies to detached houses, the overall price is going to be cheaper. This is because townhouses are smaller than stand-alone homes.
Average Townhouse Insurance Cost
The average townhouse insurance cost will depend mostly on whether you are part of a condominium association or not. If your townhouse is part of an association, you will have to pay around $500 per year. Keep in mind these prices can vary depending on your location. Usually, townhouse owners end up paying more than a typical condo resident, thanks to all the structural protection included in your policy.
The other possible case is when you are not part of an association, then the average townhouse insurance cost will be a little more than $1,000 per year. However, as we mentioned before, you will likely pay less than the homeowners of detached houses.
Some other factors that can influence the cost of your insurance policy are: how much your property is worth, how much is the necessary liability coverage, crime rates and the number of residents in your home.
Why do I need insurance for my townhouse?
Even though, as we stated above, it is not mandatory to purchase insurance for your property, we strongly recommend that you do so. The reason why buying insurance coverage is important is because, in case of a disaster everything in your house will have protection. Plus, if someone gets injured in your house and you get a liability claim the insurance will cover you.