How Do I Know Which Townhome Insurance Policy Type I Need?
It depends on your HOA's master policy. If it covers only the building's exterior, you need an HO-6 for the rest.
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Start with what the HOA's master policy actually covers
The HOA's governing documents, not the HOA itself, tell you what the master policy insures. Ask for the master policy's declarations page or a summary of coverage, since there are two common types. A bare-walls policy covers only the structure, the roof, and the exterior. Everything inside your unit, drywall, flooring, cabinets, your own fixtures, falls to you. An all-in or single-entity policy goes further and may cover original fixtures and interior walls too. Once you know which one your HOA carries, your HO-6 fills the rest. It covers your walls-in finishes, your belongings, liability, and loss of use if the unit becomes unlivable. Without that document in hand, you're guessing at how much HO-6 coverage you actually need.
A bare-walls master policy leaves everything past the drywall to you, and underinsuring that gap is the costly mistake. If a pipe bursts and ruins your floors, cabinets, and belongings, an HO-6 sized too small means paying the difference yourself. Comparing policies now, while you know what the master policy excludes, is how you find coverage that actually matches what you'd have to rebuild.
What happens when damage crosses into a neighbor's unit
Water does not respect property lines. It comes through a shared wall, down from the unit above, or along a pipe that serves both units, and once it does, the question of who pays gets more complicated than just finding fault. Most of the time it comes down to where the damage landed and what caused it, not whose plumbing failed first.
If your upstairs neighbor's washing machine overflows and ruins your ceiling and floors, your own HO-6 is usually what pays for your unit, under the coverage for walls-in finishes and belongings. You then file under your own policy rather than waiting on your neighbor's insurer to sort out liability. Their policy may reimburse you if they're found negligent, but that process takes time, and your policy is what gets your unit repaired now. This is why the size of your HO-6 dwelling coverage matters even in a dispute that technically isn't your fault.
Loss assessment works differently, and it catches people off guard more than almost anything else in townhome ownership. If the master policy has a shared deductible, say $10,000, and a pipe break under the building causes damage, the HOA may spread that deductible across every unit as a special assessment. A loss assessment coverage endorsement on your HO-6, often available in amounts like $1,000 to $50,000, picks up your share instead of you paying it out of pocket. Check your HO-6 declarations page for whether this coverage is included and how much you carry, since it is often a small add-on with a meaningful payout.
Liability runs on a similar split. If a guest is injured in a common area like the lobby or the parking lot, that typically falls to the HOA's master policy. If someone is injured inside your unit, your HO-6's personal liability coverage is what responds. Knowing this ahead of a claim, rather than during one, is the difference between a straightforward repair and a drawn-out argument over whose policy should have paid first.
What an HO-6 limit actually needs to cover
Once you know whether the master policy is bare-walls or all-in, the next question is how much HO-6 coverage to actually buy. This is where people guess low, because they're pricing against what the unit might sell for instead of what it would cost to rebuild the inside of it. Dwelling coverage on an HO-6 needs to match the cost of replacing your flooring, cabinets, drywall, fixtures, and any built-ins, not the unit's market value. A one-bedroom unit with high-end finishes can cost more to rebuild than a larger, plainer one.
A rough way to get there is to add up what it would cost to redo your unit from the studs out, using local contractor rates, then check that number against the HO-6 limit you're being offered. Some insurers can help estimate this during the quote process. If your HOA carries a bare-walls policy, this number runs higher, since you're covering everything past the exterior shell. If the HOA policy is all-in and already covers original fixtures, your HO-6 can often carry a lower dwelling limit, since you're mainly insuring upgrades, belongings, and liability.
Personal property coverage is a separate number from dwelling coverage, and it's easy to under-buy. This is what pays to replace furniture, electronics, and belongings after a covered loss, and it's worth doing an actual inventory rather than accepting a default limit. Liability coverage is the third piece, and it responds if someone is hurt inside your unit or you're found responsible for damage to someone else's. Loss of use, which pays for temporary housing if the unit becomes unlivable during repairs, rounds out the policy and is worth checking against what a comparable rental would actually cost in your area.
All of this sits on top of whatever the master policy does, so the HOA's coverage and your HO-6 need to be read together, not separately. A gap between the two, where neither policy covers something, usually shows up only after a loss, when it's too late to fix. Comparing HO-6 quotes with the master policy's declarations page in hand is how that gap gets caught before it matters.
Before you request a quote
Pull your HOA's master policy declarations page and your own HO-6 renewal side by side. Check the loss assessment amount, the dwelling limit, and whether either leaves a gap the other doesn't cover.
