HOA Insurance Requirements by State: What Statutes and CC&Rs Require (2026)

HOA insurance requirements by state stack in three layers, each on top of the last: your state's common interest statute, your recorded governing documents (the CC&Rs or condominium declaration), and, for any community with federally financed units, the Fannie Mae, Freddie Mac, and FHA overlay. The statute sets a floor, the declaration frequently sets a higher one, and the lender rules can raise it higher still. The binding number is whichever of the three is largest.

Which layer actually binds you turns on two things: whether your community is a condominium or a planned development, and which state you sit in. This guide lays out the statutory floor state by state, then walks through the federal overlay that reaches almost every community with a mortgage in it. For how a full board program fits together across lines, our homeowners association insurance hub is the parent page.

What insurance does state law require an HOA to carry?

State law usually requires an HOA to carry property insurance on the common elements at or near replacement cost, plus commercial general liability. A handful of states add a fidelity or crime policy and directors and officers coverage. The precise floor lives in your state's common interest statute. Your CC&Rs can demand more than the statute, and often do, but they cannot waive a statutory minimum down.

Most of these statutes descend from the Uniform Common Interest Ownership Act, which is why so many read alike. Property coverage is set as a percentage of replacement cost or actual cash value, liability is left to the board and the declaration, and fidelity is either mandatory or optional by state. The wording that matters is the insurance section for your specific entity type, because a state can mandate coverage for condominiums and say nothing about planned communities in the same code.

In the association policy reviews Coverwatch runs, the most common miss is a board that reads only its state statute and never opens the declaration. The declaration frequently requires higher limits, or entire lines the statute never mentions, so the statute is where the analysis starts rather than where it ends.

One line sits outside the common interest statute entirely. If the association has any employees, from an on-site manager to maintenance staff, state workers' compensation law requires coverage the same way it does for any employer. The employee count that triggers the mandate varies by state, so a self-managed board with even one payroll employee should confirm its own state's threshold rather than assume the HOA statute covers it.

HOA insurance requirements by state (2026 comparison)

The table below shows the governing statute, the property-insurance floor, whether a fidelity or crime policy is statutory, and one notable rule for ten states. Most of these sections govern condominiums; where a state treats planned communities differently, the notable-rule column flags it.

Two patterns are worth pulling out of the grid. Colorado (C.R.S. 38-33.3-313), Illinois (765 ILCS 605/12), and Florida peg the property floor at full replacement cost by statute, while Virginia reaches the same standard only when its condominium instruments require the master casualty policy. Texas, Arizona, Washington (RCW 64.90.470), and Nevada (NRS 116.3113) set a weaker floor at 80 percent of actual cash value. North Carolina (47F-3-113) splits the difference at 80 percent of replacement cost.

That gap between replacement cost and actual cash value is not academic, because a depreciated payout leaves an older building underinsured on a total loss.

Condominiums vs planned-community HOAs: why your entity type decides the rule

Many state insurance statutes apply only to condominiums, while the planned-community or property-owners-association statute in the same state stays silent. When the statute is silent, the CC&Rs become the requirement, and if the CC&Rs are also thin, the community can end up with no enforceable floor at all. That is why two associations one street apart can face very different rules.

Texas is the clearest example: a condominium falls under Property Code 82.111, which requires property coverage at 80 percent of replacement cost or actual cash value plus general liability. A conventional subdivision HOA governed by Chapter 209 has no comparable statutory insurance mandate, so its declaration is the whole story. Arizona works the same way: condominiums answer to A.R.S. 33-1253, but planned communities carry no parallel insurance section.

California: the Davis-Stirling fidelity and D&O mandates

California's Davis-Stirling Act sets two statutory insurance mandates a declaration cannot bargain away. Civil Code 5806 requires a crime, employee dishonesty, or fidelity policy equal to the association's reserves plus three months of total assessments, with matching computer-fraud and funds-transfer-fraud coverage. Separately, Civil Code 5800 conditions volunteer director and officer immunity on carrying general liability and D&O coverage.

The D&O and liability thresholds under 5800 scale with size: at least $500,000 for an association of 100 or fewer separate interests, and at least $1,000,000 for more than 100. We cover the mechanics separately in our posts on the Civil Code 5806 fidelity bond requirement and on how director and officer immunity under 5800 depends on those limits. Property insurance itself is left to the CC&Rs in California, which makes the declaration the controlling document for the master policy.

Florida: full replacement cost, appraisals, and the SIRS overlay

Florida is the strictest property-insurance regime on the list. Florida Statute 718.111(11) requires a condominium association to insure at the full replacement cost of the property. That value is set by an independent appraisal, or an update of a prior appraisal, at least once every 36 months. The statute overrides any weaker language in the condominium documents.

Two newer Florida layers sit on top of the master policy and change how boards budget for it. The structural integrity reserve study and milestone inspection rules drive the reserve and repair obligations behind the insured values, which we cover in our post on the SIRS and milestone inspection rules. Premium relief programs tie into wind mitigation for Florida condos. The full statutory walkthrough lives in our 718.111 condo insurance requirements guide.

The federal overlay: Fannie, Freddie, and FHA set a floor state law does not

For any community with federally backed mortgages, the Fannie Mae, Freddie Mac, and FHA rules act as a floor that can sit well above a weaker state statute. Fannie's B7-3-03 requires master coverage of at least 100 percent of insurable replacement cost, with actual cash value unacceptable. So an 80 percent actual-cash-value policy that satisfies a state like Texas or Arizona can still fail a lender's condition for a financed buyer.

The deductible side moved in 2026 as well. Fannie's Lender Letter LL-2026-03 caps the per-occurrence, per-unit master deductible at $50,000 for conventional loan applications dated on or after July 1, 2026, with parallel Freddie Mac guidance. Older content still quotes the superseded 5-percent-of-face-value standard. FHA condominium project approval, under Handbook 4000.1, separately requires master hazard, liability, and fidelity coverage for the project to remain eligible.

Fidelity and crime coverage: the requirement boards miss most

Fidelity coverage is the crime policy that pays the association back when a board member, manager, or employee steals its funds. It is mandatory by statute in a minority of states and optional in the rest. California (Civil Code 5806), Illinois (765 ILCS 605/12, at full funds plus reserves), Virginia (Condo Act 55.1-1963), and Washington under WUCIOA require it outright. Many other states leave it to the declaration or make it a condition only of federal loan eligibility.

Because the mandate is uneven, this is the line planned-community boards drop most often, and it is also the one the members feel most directly when it is missing. The amount rules differ sharply too: California ties the limit to reserves plus three months of assessments, while Illinois demands the full amount of association funds and reserves. Our comparison of how fidelity bond rules compare across states lays the amounts side by side.

What happens if an HOA carries less than its state requires

Carrying less than the statutory or CC&R floor exposes the association three ways at once. On a partial loss, a coinsurance clause on a policy written below the required percentage of value cuts the payout proportionally. An 80-percent actual-cash-value policy can leave a real gap on an older building.

For example, a building with a $4 million replacement cost insured to 80 percent of a depreciated $3 million actual cash value carries roughly $2.4 million of coverage. That falls well short of the cost to rebuild after a major fire. On a sale or refinance, a lender following the Fannie or FHA floor can reject the master policy outright and stall closings for every owner in the community.

The third exposure falls on the board itself, because letting required insurance lapse or fall short can reach the directors personally. Maintaining adequate coverage is a board fiduciary duty under most declarations. The practical fix is to reconcile the master policy against the highest of the three layers before renewal, not after a claim exposes the shortfall. Boards that treat the state minimum as the target, rather than the floor, are the ones that find the gap at the worst possible moment.

How to confirm what your association is required to carry

Start with the statute for your exact entity type, condominium or planned community, since the two often live in different chapters of the same code. Read the insurance article in your CC&Rs or declaration next, because it can require more than the statute. Then, if any unit or lot carries a federally backed mortgage, check the master policy against the Fannie, Freddie, and FHA floor. That overlay is the one boards tend to discover the hard way, at a closing.

Coverwatch reads all three layers together for an association and reconciles the master policy limit and deductible against the statute, the declaration, and the lender rules. It then shops the program across its carrier partners on a flat fee. If you are not sure which of the three layers is binding on your community, that is the review to run before renewal rather than after a claim.