HO-3 vs HO-6 for Townhouse Pros and Cons
HO-3 fits a townhouse with no HOA master policy. HO-6 fits one where the HOA insures the structure.
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Check how your townhouse is actually owned before picking between them. If an HOA or a master deed holds title to the building and exterior and you just own the unit, you need HO-6, and the master policy's declarations page will tell you what it covers so you know where your coverage should start. If there's no HOA, no master policy, and you own the structure outright, lot included, HO-3 is the right fit since you're insuring the whole building yourself, not just the interior.
What an HO-6 covers inside your unit, and how much, varies more between insurers than people expect, especially loss assessment coverage for your share of an HOA deductible or an underinsured master policy. One insurer's standard limit might leave you exposed to a special assessment that another covers in full. Comparing policies here is how you find out before a loss forces the question.
What does an HO-6 policy actually pay for inside the unit
An HO-6 policy is built around the idea that the master policy handles the building and you handle everything within your own walls. That split is usually called walls-in coverage. It includes your flooring, cabinets, fixtures, and any upgrades you made, like new countertops or built-in shelving. It also covers your personal belongings, furniture, clothes, electronics, the things you'd take with you if you moved out. Some HO-6 policies also include a small amount of coverage for the structure itself, in case the master policy has gaps or doesn't cover certain interior elements like drywall or built-in cabinetry. Your declarations page will show that number, often listed as Coverage A.
Loss assessment coverage is the part people learn about only after it's too late. When the HOA's master policy doesn't fully cover a shared loss, like roof damage after a storm or a lawsuit from a slip and fall in the common area, the HOA can bill every unit owner for their share of the cost. That bill is a special assessment. Loss assessment coverage in an HO-6 policy pays it, up to whatever limit the policy sets. The standard limit on many policies is modest, often a few thousand dollars, which may not cover a large assessment spread across a small number of units. Higher limits are usually available for a small added cost, and this is one of the main reasons to compare HO-6 policies rather than take the first one offered.
Water damage from a neighboring unit is one of the most common claims in attached housing, and who pays depends on where the water started and whose policy responds first. If a pipe bursts in the unit above and water comes through the ceiling, the upstairs owner's HO-6 policy typically covers the damage to their own unit, while the downstairs owner's HO-6 policy covers damage to their unit and belongings, regardless of fault. The master policy may step in if the damage reaches shared structural elements like load-bearing walls or the roof. Some HOAs pursue the at-fault owner for the deductible or uncovered costs, which is another scenario loss assessment coverage can apply to.
Figuring out how much personal property and interior coverage a unit needs starts with a simple estimate of what it would cost to replace everything inside, from furniture to finishes, plus the cost to rebuild the unit's interior if it were stripped down to the studs. Many owners underestimate this, especially after renovations. The master policy's declarations page, combined with a walk-through of what's actually inside the unit, gives a starting point for the right coverage amount.
How the master policy's coverage type changes what you need
HOA master policies aren't all built the same way, and the type matters more than most owners realize when they're setting their own HO-6 limits. A bare walls policy covers only the structure itself, the studs, the foundation, the roof, leaving everything else, drywall, flooring, cabinets, even built-in appliances, for the unit owner to insure. A single entity or all-in policy goes further, covering fixtures and sometimes even the interior finishes as they existed when the building was built. If your HOA carries a bare walls policy and you buy an HO-6 with a low Coverage A limit, you could end up paying out of pocket to replace drywall and flooring after a loss the master policy was never going to touch.
Finding out which type your HOA has means reading the master policy's declarations page or asking the HOA board directly, not guessing. The document usually says what's covered in a section about the building or the common elements, and it's worth comparing that language against what's actually in the unit. Two townhouses in the same complex can need very different HO-6 limits if one owner gutted the kitchen and the other didn't, because upgrades and built-ins typically fall on the unit owner's policy regardless of what the master policy covers structurally.
Betterments and improvements are the piece that trips up a lot of owners at claim time. If a previous owner or the current one added custom cabinetry, upgraded flooring, or finished a space that was originally unfinished, that work usually isn't part of what the master policy insures, since it covers the building as it stood when the policy was written or as the HOA's governing documents define it. An HO-6 policy's Coverage A, the part that applies to the interior structure, is what pays to restore those upgrades, so a unit with significant renovations generally needs a higher limit than one that hasn't been touched since it was built.
HOA bylaws sometimes specify a minimum HO-6 coverage amount unit owners are required to carry, particularly for loss assessment or interior coverage, so it's worth checking those documents before assuming a policy's default limits are enough. Some associations update these requirements after a claim exposes a gap, which is also a reasonable moment for any owner to revisit their own coverage even if the HOA hasn't asked.
Before you compare policies
Pull your HOA's master policy declarations page. Check whether it's bare walls or all-in, and check its loss assessment deductible. Those two numbers tell you what Coverage A and loss assessment limit your HO-6 actually needs.
