What Type Of Insurance Do You Need For A Townhouse?

What Type Of Insurance Do You Need For A Townhouse?

Written by Lisa Rennie
Fact-checked by Caitlin Wood
Last Updated May 2, 2022

Having an insurance policy for your townhouse will ensure that you have adequate coverage in case the unexpected happens. Whether your belongings are stolen after your home has been broken into, your home is damaged from a natural disaster, or you’re liable after someone gets hurt while on your property, an insurance policy will help cover the financial repercussions. 

But exactly what type of insurance policy do you need for your townhouse? The answer will depend on what category your townhouse is under. Let’s go over the different insurance policies that are available to protect townhouses.

What Is A Townhouse?

A townhouse is a multi-level home that is attached to an adjacent home through shared walls and roof, and sometimes attached garages. Also known as “row houses”, townhouses are typically considered “freehold”, which means the owner owns the structure and land it sits on. The owner would also be entirely responsible for maintenance and upkeep of the property, as well as for paying any associated property taxes

In the case of a freehold arrangement, the owner is also responsible for insuring the property.

There are also townhouse complexes that are classified as condominiums, which means the owner only owns a share of the condo corporation, and not any part of the land. In this case, the condo corporation governs what owners are allowed to do to their properties and is responsible for taking out an insurance policy to protect the building and common areas. 

Townhouse owners in a condominium arrangement can take out an insurance policy to protect their personal belongings, any improvements made following a renovation, or to cover unexpected events that may cause damage to your unit or another unit or injury to an individual inside your home. 

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What Type of Insurance Do You Need For A Townhouse?

The type of insurance required for a townhouse will depend on the classification of your home; namely, whether it’s considered freehold or a condominium. Your insurance policy will also depend on whether you own or rent your home. The following are types of insurance policies you may need to provide you with the appropriate coverage.

Renter’s Insurance 

If you’re renting your home, you may want to take out a renter’s insurance policy to protect your belongings, to protect yourself against any liabilities, and to cover the cost of living expenses in the event that your home is uninhabitable. 

Homeowner’s Insurance

A homeowner’s insurance policy is meant to protect your home and the contents within it from theft, loss, or damage. The policy also covers damage to the interior and exterior of your home in the event of a natural disaster, theft, or vandalism. It may also help pay for any living expenses you incur if you’re temporarily unable to live in your home. 

If your townhouse is a freehold home, then a homeowner’s insurance policy would apply. 

Condo Insurance

Condo insurance covers the cost of any theft, loss, or damage done to the inside of your unit and storage locker, as well as any liability on your part if someone gets hurt in your home. However, it does not cover the exterior of your home or any common areas, which are the responsibility of the condo corporation to cover. 

If your townhouse is a condominium, this is the type of insurance policy you’ll need

What Does Townhouse Insurance Cover?

A townhouse insurance policy typically includes the following:

  • Homeowner’s Insurance. If any part of your home’s interior or exterior is damaged, your homeowner’s insurance policy will cover the cost to repair or replace it. This includes interior and exterior walls, flooring, cabinetry, countertops, plumbing, electrical wiring, the roof, and the land that your townhouse sits on.
  • Personal Property. If any of your personal belongings are stolen, lost, or damaged, the personal property portion of your insurance policy will cover the loss up to a specific limit. This includes things like your appliances, furniture, electronics, and clothing, among others.
  • Third-Party Liability. If someone is injured on your property or their belongings are lost or damaged, the liability portion of your policy will cover any potential lawsuits, repair costs, or medical expenses.
  • Loss of Use. If your home becomes inhabitable after extensive damage is done, the loss of use portion of your insurance plan will cover the cost of temporary living arrangements, as well as any additional food expenses or mileage.

It’s important to understand that certain sources of damage may or may not be covered with your townhouse insurance policy. For instance, damage stemming from vandalism, theft, vehicles, wind, hail, lightning strikes, and fire are usually covered. But flooding from overland floods or sewer backup may not be covered unless you purchase additional coverage to add to your policy.

Townhouse Insurance FAQs

How do I know if I need condo or home insurance for my townhouse?

The answer to this question will depend on whether your townhouse is freehold or a condo. If you have not yet purchased the home, look for certain keywords in the listing for a townhouse, such as “shared” or “communal”, which likely means the home is a condo.  Further, any listed condo fees will also be a giveaway that the home is a condo. In this case, a condo insurance policy would be applicable.  Otherwise, a listing that specifies “freehold” means you would own the home outright, in which case a homeowner’s insurance policy would apply. 

Can I get a detached townhouse?

No. A townhouse is defined as a home that shares at least one wall with another home. Conversely, a detached home does not share a wall with another property. 

Do I have to pay maintenance fees for townhouses?

If the townhouse is in a condominium complex with a condo board, then maintenance fees would have to be paid.

Is condo insurance cheaper?

Condo insurance policies are usually cheaper than insurance policies for detached homes. 

Final Thoughts

Regardless of whether your townhouse is freehold or condo, you should still have some form of insurance policy in place. That said, it’s important to understand exactly how your townhouse is classified in order to ensure you buy the right policy for your home. 

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Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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