If you own a condo or townhome in Michigan — or you’re thinking about buying one — figuring out the right type of home insurance can be confusing.
Unlike a traditional single-family home, condo and townhome insurance depends heavily on what your
homeowners association (HOA) or
condo association’s master policy covers.
Many owners assume the association’s insurance protects everything, only to find out after a claim that they were underinsured.
This guide breaks down exactly what type of policy you need, how condo and townhome insurance differs in Michigan, and what coverages are most commonly overlooked.
Why Condo and Townhome Insurance Is Different
With a standard homeowners policy, coverage is straightforward — the policy typically covers the structure, personal property, liability, and additional living expenses.
With condos and townhomes,
responsibility is shared between you and the association.
The key question is:
Where does the association’s coverage stop — and where does yours begin?
That answer determines whether you need:
- An
HO-6 policy, or
- A
standard homeowners (HO-3) policy
HO-6 Insurance: Condo Insurance in Michigan
Most condos in Michigan require an
HO-6 insurance policy, which is designed specifically for condominium owners.
What an HO-6 Policy Typically Covers
- Interior walls, flooring, cabinets, and fixtures
- Personal belongings
- Personal liability
- Loss of use (temporary housing after a claim)
- Loss assessment coverage (critical for condos)
What It Usually Does NOT Cover
- Exterior walls
- Roof
- Common areas (hallways, elevators, amenities)
Those areas are usually insured under the
association’s master policy.
HO-3 Insurance: Townhome Insurance in Michigan
Townhomes can be insured one of two ways, depending on how the association is set up.
You Likely Need an HO-3 Policy If:
- You own the structure of the townhome
- The association only covers common areas
- The master policy is very limited
An HO-3 policy functions like traditional homeowners insurance and usually covers:
- The entire structure
- Personal property
- Liability
- Additional living expenses
Important Note
Some townhomes are insured like condos (HO-6), while others require full homeowners coverage (HO-3). The legal ownership structure — not how the building looks — determines the policy type.
Why the Master Policy Is So Important
Your association’s
master policy defines what is covered and what is not.
There are typically three types of master policies:
- Bare walls
- Single entity
- All-in
Each shifts responsibility differently between you and the association.
If you don’t review the master policy:
- You could be underinsured
- You could duplicate coverage unnecessarily
- Claims can turn into financial surprises
Reviewing this document is one of the most important steps when insuring a condo or townhome.
Loss Assessment Coverage: Often Overlooked, Very Important
Loss assessment coverage helps pay your share of a claim when:
- The association’s policy has a large deductible
- The master policy limit isn’t high enough
- A major loss is spread across unit owners
Examples include:
- Roof or siding damage
- Fire affecting multiple units
- Large water losses
Without loss assessment coverage, owners can receive
unexpected bills for thousands of dollars.
Optional Coverages Worth Considering
While condo and townhome insurance is often more affordable than a standard homeowners policy, certain optional coverages can be extremely valuable.
Water Backup Coverage
Covers damage from:
- Sewer backups
- Sump pump failures
This is especially important for lower-level units or finished basements.
Ordinance or Law Coverage
Helps pay for:
- Code upgrades after a covered loss
- Older buildings that must meet current building standards
This coverage can be crucial in many Michigan condo associations with aging infrastructure.
Is Condo Insurance Cheaper Than Homeowners Insurance?
In most cases, yes.
Because the association insures much of the structure,
HO-6 policies are typically more affordable than traditional homeowners insurance.
That said, cost depends on:
- The master policy structure
- Coverage limits selected
- Optional endorsements added
- The value of your interior finishes and belongings
Final Thoughts: Get the Right Policy Before You Need It
Condo and townhome insurance in Michigan isn’t one-size-fits-all.
The right policy depends on:
- Whether you own the structure
- What your association’s master policy covers
- How much risk you want to retain personally
Before buying or renewing coverage, reviewing the master policy and confirming whether you need an HO-6 or HO-3 policy can prevent major gaps.
If you’re unsure, working with an insurance professional who understands Michigan condo and townhome associations can make the process far less stressful.
