I live in a townhome that is being financed. Can I purchase insurance to cover my mortgage balance incase my home were to catch fire. My homeowners assoc. covers the outside structure of the house, but do I need special insurance to payoff the balance of my loan in the event of a tragedy.

If your townhouse complex is not covered by a blanket policy, then yes you would need to have insurance to cover in case of destruction. If the complex HOA has a blanket policy, then no you don't really need the additional insurance, other than to cover your personal belongs. If you wanted insurance to pay off the mortgage should you die, that is separate as well.