What Is the Difference Between a Townhouse & a Condominium for Insurance Purposes?

by Mary Schultz ; Updated July 27, 2017
Interior of a modern condominium.

Townhouses and condominiums share certain characteristics and have some differences, and in terms of their structure, there is some overlap. For insurance purposes, the differences between townhouses and condominiums have to do with the way ownership is structured. States may regulate each differently, but some common guidelines typically prevail.

Physical Description versus Ownership Description

Many people think of a condominium complex as stacked block apartment-type residential housing, and think of a townhouse complex as rows of semi-detached houses with at least one shared wall. In terms of construction, a series of townhouses can be part of a condominium project. The differences arise because many townhouse developments are not owned as condominiums. A condo may be taxed as an individual property. A percentage of the common property within the condo complex also can be taxed. A townhouse is likely to be taxed as an individual property.

Shared Characteristics

The obvious shared characteristic is that each is a single residence attached in some way to other single residences. Usually, townhouses and condos both have shared walls. Both sometimes have shared common community areas, such a swimming pool or recreation hall. Condos and townhouses both are taxed.

Points of Difference

Structurally, condominiums come in many forms. A multiple-housing-unit building that looks like a multistory apartment building may have individual residential units, and these units may be condos. The condo owner does not hold the land or the building in individual ownership. The owner of the condominium shares the entire building with other occupants. Each owner uses common facilities, such as hallways, elevators, tennis courts and swimming pools. Ownership of a condominium usually entails ownership of air space in the individual unit and sometimes interior walls. The land is held in collective ownership with all the other owners in the condo complex.

With a townhouse, walls that the houses share delineate property lines and separate units. Owners usually share no common areas for access to individual homes. A townhouse owner may own the land on which the townhouse is located, as well as decks and landscaping, and may also own the structure.

Insurance

Condominium owners usually purchase insurance that is similar to renters insurance to cover their personal belongings contained within the condominium. If they make improvements or alterations to the condo, they can add insurance to cover their investments against loss to the amount or limits they and their insurers determine. The association only has responsibility for carrying liability insurance for common areas, so individual owners must provide their own liability insurance for their own individual units. A condominium association is likely to insure the entire condo complex against perils such as fire and loss from liability surrounding common areas. Individual condo owners, through an association, usually are assessed a fee to cover the expense of this common insurance.

Because townhouses are connected via shared walls, they are commonly joined in an association with a master insurance policy on the building. If a townhouse has no master policy, the owners usually can purchase insurance that is similar to homeowners insurance.

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