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What is townhouse insurance?
Matt Hands, VP, Insurance
While a townhouse may be a more affordable type of property to own, it's still likely to be one of your biggest investments — and that’s where townhouse insurance comes in.
Townhouse insurance is exactly what it sounds like: property coverage tailored for townhomes. It works much like any other home insurance policy, helping cover the cost of damage or loss caused by unexpected events.
Below, we take a closer look at the types of coverage your townhouse may need – and everything you should know about protecting your home. And when you're ready, be sure to compare personalized townhouse insurance quotes with us to find the best rate for your needs.
What is a townhouse?
A townhouse (or townhome) is a multi-level home that shares one or mall walls with its neighbouring units – but has its own private entrance. These homes are typically tall and narrow, combining the feel of a single-family home at a more affordable cost. If you own a townhouse, you generally own both the interior and exterior, including the front and backyard space.
As its name suggests, townhouses are typically found in towns: urban and suburban areas where space is limited but family living is common. It offers a more compact, community-style living option.
Townhouse vs. condo vs. rowhouse vs. duplex
Townhouses are commonly confused with other types of homes, like condos, rowhouses, and duplexes. Here, we cover the core differences, so you can understand the classification of your property:
Is townhouse insurance mandatory?
Like any home in Canada, there's no legal requirement to have insurance on a townhouse. However, most mortgage lenders require you to carry home insurance as part of the loan agreement – so if you have a mortgage on your townhouse, chances are, you'll need the coverage.
If you rent your townhome, your landlord will also likely require you to have tenant insurance. This works similarly to a home insurance policy, but it generally won't provide coverage for the physical dwelling. Instead, this is covered on a landlord insurance policy.
And even if it’s not mandatory in your case, having home insurance is still a smart move. The last thing you want to worry about as a homeowner is how you’ll afford repairs or replacements after a fire, break-in, or major storm. Insurance helps protect your biggest investment financially and gives you peace of mind when life takes an unexpected turn.
Do I need home or condo insurance for my townhouse?
Whether you need home insurance or condo insurance for your townhouse depends mainly on the type of townhouse you own (and how your townhouse ownership is structured):
Freehold townhouse - If you own both the land and the building outright – known as a freehold townhouse – you will typically need a standard home insurance policy. This type of policy covers the entire structure of your townhouse, including the walls, roof, and any other parts of the property you own, as well as your personal belongings and liability protection.
Condo-style townhouse - If your townhouse is part of a condo corporation, meaning the exterior structure and common areas are owned and insured collectively by the condo corporation, you will generally need condo insurance. This insurance primarily protects the interior of your unit, your personal belongings, any improvements you’ve made inside, and liability coverage. The condo corporation’s master insurance policy, which is paid for through maintenance fees, usually covers the building’s exterior and shared spaces.
Choosing the right type of insurance ensures you have proper coverage without paying for overlapping or unnecessary protection. If you have any questions about your property coverage needs, be sure to connect with a trusted broker for more insight.
Types of coverage on a standard townhouse insurance policy
While every townhouse insurance policy may differ, most include the same standard set of coverages. Below, we cover the most common ones in more depth – but always review your specific policy to understand the exact details, limits, and exclusions.
Dwelling
Third-liability
Personal property
Additional living expenses
Optional add-ons for your townhouse insurance policy
Just like with any home insurance policy, you can personalize your townhouse coverage with optional add-ons. Here are a few common ones you can discuss with your insurance broker:
Sewer backup
This protects your townhome against damage caused by water entering at ground level, such as from heavy rain or overflowing rivers.
Overland water
This coverage pays for damage if water backs up into your townhouse through reasons like drains, toilets, or sump pumps.
Identity theft
This helps cover the costs of restoring your identity if it’s stolen, which can include legal fees and lost funds.
Home-based business
This protects your business equipment and provides liability coverage if you run a small business from your townhouse.
Earthquake coverage
This offers financial protection if your home is damaged or destroyed by seismic activity.
Guaranteed replacement
This ensures your home will be rebuilt to its original condition, even if the cost exceeds your policy’s dwelling limit.
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How much does townhouse insurance cost?
While the average cost of home insurance across Canada is about $1,200, coverage for a townhouse is generally cheaper due to the smaller size and shared walls. You won't know the exact cost of your coverage until you compare quotes for your case – so be sure to shop the market with us today.
Depending on your property layout and build you maybe able to save on coverage requirements. For example, if your townhouse doesn't have a basement you may opt for less overland water or sewer back up coverage than you would in a standard home with a basement.
Factors that impact your townhouse insurance rate
To understand why townhouse insurance prices can vary so widely, it helps to look at the key factors insurers consider when calculating your quote. Generally, the higher the risk associated with you or your home, the more you'll pay for coverage.
Property age
Older townhomes typically come with higher insurance costs, as they carry a greater risk of damage or loss.
Property value
The more valuable your townhome, the more it will cost to insure – since your provider would need to pay more to repair or replace it.
Construction
The way your townhouse is built matters. Features like fire-resistant siding or reinforced roofing can help reduce your premium by lowering risk.
Location
Where your home is located plays a major role. Homes in areas prone to extreme weather or with higher crime rates usually come with higher insurance costs.
Claims history
A track record of past insurance claims – whether on a home, condo, or renter’s policy – can lead to higher premiums.
Credit score
Allowing a soft credit check (and having strong credit) can work in your favour. Insurers see this as a sign of financial responsibility, which can help lower your rate.
Discounts
Insurance discounts can make a noticeable impact on your premium. You may qualify for more than you think, so it’s worth asking what’s available.
Coverage & deductibles
The more townhouse coverage you choose (and the higher the limits), the more you'll pay. But you can balance costs by selecting a higher deductible.
How to save on townhouse insurance
There are several ways to reduce the cost of your mobile home insurance. Ask your insurance provider if you qualify for discounts based on things like:
- Owning your home mortgage-free
- Being a member of certain groups, such as professional associations or alumni networks
- Installing safety features like smoke detectors or a monitored security system
- Bundling insurance polices; e.g. having your townhouse insurance and auto insurance policies with the same insurance company
- Agreeing to a soft credit check
- Taking a higher deductible (i.e. your agreed upon co-pay amount for any claim)
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