Q: What is the difference between insuring a condominium and a townhouse? Can townhouse exteriors be insured by each owner, with the homeowners association (HOA) insuring common areas? 

Response 1: Ultimately, it is the HOA's or condo association's declarations and bylaws that will determine who is responsible for insuring the exterior of the building, as well as the interior parts of the building, including interior partitions and fixtures. 

Typically, but not always, the condo association will own and insure all common areas, which would include the exterior of the building. Depending on the declarations and bylaws, the unit owner may be responsible for the “studs in"—that is, everything inside of the studs within the walls, according to Justia, including partitions and fixtures.

For townhouses, the unit owner often owns the entire dwelling they occupy and is responsible for insuring the building, including the exterior. Common areas would still be the responsibility of the association. 

In some instances, a condo association insures the entire unit, including the interior and fixtures. I have also seen HOAs insure the entire unit, including the exterior, interior and fixtures. 

The bottom line is that the policy should be written to meet what the HOA's declarations. The bylaws state that the condo or townhouse owner has the responsibility to insure.

Response 2: With a townhouse, the homeowner owns the land that your unit sits upon and everything up through and including the roof. With a condo, the owner only owns “within the box" of the structure. What you own and what you are responsible for insuring is outlined in the condo documents.

Today, there are so many hybrid arrangements that the distinction has become blurred. Some condos are free-standing structures with the condo declarations requiring the unit owner to insure the entire structure. Some townhouse HOAs may make unit owners responsible for insuring common walls. It comes down to the governing documents.

Some carriers prefer to insure townhouses on a regular homeowners form such as an HO3 or HO5 rather than a condo form. The important thing is to understand what the insured owns in the arrangement and to protect their interest.

Response 3: Review the legal definitions in the venue that concerns you. In some states, there is a legal difference and in others, there is not. In some states, a condo owner only has possession over the inside of the unit with the association owning the exterior and the land. In some states, the owner of a townhouse controls the interior, exterior and the land where the structure is located. 

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