/hoa-insurance-faq

Is HOA insurance required by law for an HOA?

Discover whether HOA insurance is legally required and what it means for your homeowners association. Stay informed and protect your community.

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Reviewed by:

D. Goren

Head of Content

Updated Dec, 6

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Is HOA insurance required by law for an HOA?

 

Is HOA Insurance Required by Law?

 

Whether an HOA must carry insurance depends on state law and the HOA’s own governing documents (CC&Rs, bylaws, articles). There is no single national rule. However, almost every HOA is required to carry some form of insurance for basic protection.

 

What Most States Legally Require

 

Many states have statutes that apply to common-interest communities. These laws usually require HOAs to carry certain insurance types, especially when property is owned in common. When a state requires insurance, the law usually covers the following:

  • Property insurance (sometimes called hazard insurance): Required when the HOA owns or maintains buildings, clubhouses, roofs, exterior walls, or shared structures.
  • Liability insurance: Required so the HOA can cover injuries or damage that happen in common areas like sidewalks, pools, and parks.
  • Fidelity or crime insurance: Required in several states to protect the HOA’s money from theft or fraud by someone handling funds.

These requirements exist because an HOA is a legal entity responsible for shared property. Without insurance, homeowners would be financially exposed if something is damaged or someone is injured.

 

What Governing Documents Normally Require

 

Even in states without strong insurance laws, CC&Rs almost always require the HOA to carry:

  • Master policy insurance: A broad policy covering structures or common areas the HOA maintains.
  • Directors and Officers (D&O) insurance: Protection for board members against claims of mistakes or mismanagement.

If the CC&Rs require it, the HOA must carry it, even if state law is silent.

 

When Insurance Might Not Be Required

 

Small, non-condo HOAs that only manage landscaping or signage sometimes have no legal obligation for property insurance because they own no structures. Still, they normally must carry liability insurance due to risk of injury on common property.

 

Key Takeaway

 

In almost all cases, yes — insurance is required either by state law or by the HOA’s own documents. The type and amount depend on state statutes and what the HOA is responsible for maintaining. If you want to know your HOA’s exact requirements, check your state’s HOA statute and your CC&Rs’ insurance section.

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