What Insurance Do I Need for My Townhouse?
If an HOA master policy covers the exterior, you need an HO-6 policy for your interior, belongings, and liability.
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Your townhouse sits between two policies
The HOA's master policy covers the building itself, the roof, the shared walls, the structure, but it stops at the inside of your unit. That's where your HO-6 policy picks up. It covers the walls, floors, and cabinets inside your unit, the things you own, and your liability if someone gets hurt inside. Check your HOA's governing documents for whether the master policy is "bare walls" or includes some built-in finishes, because that line determines how much interior coverage you need to buy yourself. If a neighbor's washing machine floods your unit, your HO-6 pays for your damage first, and your insurer may seek reimbursement from the neighbor's policy afterward. If the HOA's master policy doesn't cover the whole loss, it can issue a special assessment to owners, which is a separate cost loss assessment coverage on your HO-6 is built to handle.
The gap between a bare-walls master policy and full interior coverage can run tens of thousands of dollars if your unit is ever damaged, and loss assessment limits vary widely from one HO-6 policy to the next. What one insurer sets as a default often falls short of what your HOA's bylaws could actually assess. Comparing policies now means finding one sized to your building's real exposure, not a generic limit.
How much HO-6 coverage does a townhouse actually need
Start with your HOA's governing documents, not a generic number. Call the HOA office or check the bylaws for the master policy's deductible, because that number matters more than people expect. Many master policies now carry deductibles of $10,000, $25,000, or more for things like water damage or wind. If that deductible gets divided among unit owners or charged back as a special assessment, your loss assessment coverage is what pays it. A policy with a $1,000 loss assessment limit does nothing against a $25,000 deductible assessment. Match the limit to the deductible, not the other way around.
Dwelling coverage on an HO-6, sometimes called Coverage A, needs to reflect what it would cost to rebuild the interior of your unit if the master policy is bare walls. That means drywall, flooring, cabinets, countertops, built-in appliances, anything attached to the structure that you'd have to replace from scratch. If you've renovated the kitchen or finished a basement, that added value needs to be reflected in your coverage amount. The insurer's default estimate won't know about work done after the unit was built. An agent or your insurer can help estimate this, but the HOA documents are the starting point.
Personal property coverage works the same way it would in any home. It needs to be enough to replace your furniture, electronics, and belongings if they're destroyed. A home inventory, even a simple one with photos and rough values, makes this easier to set correctly and makes a claim faster to settle later. Liability coverage matters more in a townhouse than people assume, since shared walls and close quarters mean a fire or water leak in your unit can affect a neighbor's unit. Your liability coverage is what responds if you're found responsible for their damage.
Loss of use coverage, which pays for temporary housing if your unit becomes unlivable after a covered loss, is worth checking closely too. Townhouse repairs can take longer than expected when they involve coordination with the HOA or shared systems. A loss of use limit that assumes a quick repair can run out before the work is done. None of these figures are fixed by law or by convention. They depend on the unit, the building, and the HOA's own policy, which is why reading the master policy's declarations page before buying an HO-6 saves money and gaps later.
What happens when the HOA's insurance isn't enough
A special assessment usually shows up after the master policy's limits or deductible leave a gap that the HOA can't absorb on its own. Say a fire damages the roof and three units, and the total cost comes in above what the master policy pays out. The HOA board has to cover the difference somehow, and that usually means billing every owner a share of it, regardless of whether their unit was the one damaged. Loss assessment coverage on your HO-6 is what responds to that bill. Without it, the assessment comes straight out of pocket.
How loss assessment coverage actually pays out depends on the wording in your HO-6, not just the limit you picked. Most policies cover assessments tied to property damage, like the fire example, but exclude assessments related to lawsuits against the HOA or earthquake and flood damage unless you've added that back in. If your region carries earthquake risk, check whether the HOA's master policy has earthquake coverage at all, and if it doesn't, your loss assessment coverage likely won't pay out either, since it generally only extends coverage the master policy carries. That's worth confirming before assuming the number on your policy is enough.
Raising the loss assessment limit is usually inexpensive compared to the exposure it covers. Moving from a $1,000 limit to $50,000 often costs a small amount more a year, because assessments large enough to trigger a claim are uncommon even though they can be expensive when they happen. Given how cheap the increase tends to be relative to the protection, it makes sense to size the limit to the HOA's deductible and the building's age and construction, not to whatever number the policy defaults to.
Water damage from a neighboring unit deserves a second look too, since it's one of the more common claims in attached housing. If a pipe in the unit above bursts and ruins your ceiling and flooring, your HO-6 pays for your damage, and your insurer may then try to recover its costs from the neighbor's insurer if the neighbor was negligent, say they ignored a slow leak for months. That process happens between the insurers, not between neighbors directly, and it doesn't delay your own claim getting paid. If the water came from a shared pipe that's the HOA's responsibility to maintain, the master policy may be the one that responds instead, which is another reason knowing where the master policy's coverage stops matters before a loss happens, not after.
Before you pick a limit
Pull the HOA's master policy deductible from its bylaws or declarations page, then size your loss assessment coverage to match it. That single number is the one most owners guess wrong.
