Buying the right coverage for your townhome can be tricky. The type of insurance you need will depend on whether you rent or own your townhome and whether your townhome belongs to a homeowners association (HOA) with a blanket insurance policy.
If you rent your townhome, you can buy renters insurance and you’ll be set. If you own your townhome, but it also belongs to a homeowners association, you’ll likely need HO6 insurance. If that’s the case, check out our article, “HO6 Insurance: Get the Right Coverage for Your Condo.”
Today, we’re focusing on HO3 insurance, which is the type of policy you’ll need to take out if you own your townhome and don’t belong to an HOA.
What is HO3 insurance?
An HO3 policy is a standard homeowners insurance policy for a single family dwelling. If you take out a mortgage at the bank for your home, you’ll be required to show proof of insurance. If you don’t take out a mortgage, you’re not required by law to have insurance for your townhome. Of course, if there’s any kind of disaster or an accident on your property, you’re going to wish you had it.
What does an HO3 policy cover?
We recommend purchasing a policy that includes at least four types of coverage: dwelling, personal property, liability, and additional living expenses. Your policy should cover both the interior and exterior of your home and its foundation, your personal belongings, and any outbuildings on your property.
Protecting Your Home
If your home is damaged or destroyed, dwelling coverage will help you rebuild. The amount of dwelling coverage in your policy should equal your home’s replacement cost—how much it would cost to rebuild your home from the ground up. Your dwelling coverage should cover fire and smoke damage, theft and vandalism, objects that fall on your home, and common weather-related damage (lightning, hail, strong winds, etc.).
Protecting Your Personal Property
If there’s a disaster, you also want the stuff in your home to be covered. Personal property coverage will protect your furniture, electronics, appliances, clothing, and other belongings in your home and on your property.
If you’re forced out of your home while repairs are being made, wouldn’t it be nice for your hotel and dining expenses to be covered so you don’t have to worry about extra expenses during that stressful time? Additional living expenses coverage will reimburse you for additional costs to you and your family that go above and beyond what you’d normally be paying at home.
You also need protection if any accidents occur on your property. If someone falls and breaks their arm, for example, you could be held responsible for the accident and forced to pay for the medical bills. If that same person files a lawsuit against you for tripping on your property, you’ll also have legal fees to worry about. Liability insurance can help. We recommend carrying a personal liability limit of no less than $300,000.
Would I ever need an HO3 policy if I belong to a homeowners association?
If you want more comprehensive coverage than an HO6 policy offers—which can have several coverage gaps—you can buy an HO3 policy instead. Be sure to check with your HOA so you understand exactly what the association owns and covers versus what you own and are personally responsible for.
Pay close attention to the list of covered perils. Then compare possible coverage options offered by both an HO3 and HO6 policy to help you decide the best course of action. If you find too many coverage gaps in the HO6 policy, opt for an HO3.
If you’re unsure which type of insurance policy—HO3 or HO6—is right for you, we’d be more than happy to help. Coverage Direct is an independent insurance agency that works with customers across much of the United States. We can help you find better, more affordable insurance options for your home, vehicle, business, and more.
Contact us any time with questions, or get started with the quote process today by clicking below. After we understand exactly what you’re looking for, we’ll bring you some different options from our carefully vetted insurance partners.
We represent carriers that offer discounts for EMTs, so be sure and let us know if that’s you!