An HOA owns or maintains property, collects money and is run by volunteers, and each of those is a separate risk with its own policy. Property insurance covers the buildings or common areas the CC&Rs put on the association. General liability is designed to answer injury claims from the pool, the clubhouse or a cracked sidewalk. D&O is designed to answer claims that the board made a wrongful decision. Crime or fidelity coverage is designed to protect reserves and assessments from theft, including theft by a manager. If the association has employees, workers’ comp comes in, and many boards add an umbrella on top. Whatever the master policy leaves out, owners pick up on their own HO-6 or homeowners policy, with loss assessment coverage for special assessments.
Master property: what the CC&Rs make the association insure
The starting point is the governing documents: the CC&Rs or condo declaration decide which parts of the buildings the association insures and which parts each owner insures. In many townhome and single-family planned communities, owners insure their own homes and the association insures only common areas such as a clubhouse, pool or gates. In most condo buildings, the association carries a master policy on the structures themselves. Fannie Mae, for example, expects a condo project to carry a master policy on the common elements and residential structures unless its legal documents require individual policies, written at no less than 100% of estimated replacement cost.
Master policies come in a few forms. Washington’s insurance commissioner describes three: all-in, which covers the exterior plus interior finishes like cabinets, fixtures and floor coverings; all-in excluding improvements or betterments, which covers the original finishes but not owner upgrades; and bare walls, which stops at the uncovered drywall and subfloor.
Some states draw the line by statute. Florida’s condominium law has the association’s property coverage exclude personal property inside the unit and items such as floor, wall and ceiling coverings, electrical fixtures, appliances, water heaters, built-in cabinets and countertops, and window treatments, which are the unit owner’s responsibility. It also calls for the replacement cost to be determined at least once every three years.
General liability for the common areas
General liability is designed for bodily injury and property damage claims arising from the association’s property and operations: a fall on the pool deck or a tree limb landing on a parked car. For condo projects, Fannie Mae’s standard is at least $1 million per occurrence for bodily injury and property damage, with the HOA as the named insured, coverage for the common elements and any HOA-owned commercial space, and a severability of interests provision.
State law can attach consequences to the limit. In California, Civil Code 5805 says that where owners hold common area as tenants in common, tort claims arising solely from that ownership go against the association, not individual owners, if the association carries general liability of at least $2 million (100 or fewer separate interests) or $3 million (more than 100).
Directors and officers liability
Board members get sued over decisions: an architectural request denied, a rule enforced unevenly, a contractor chosen, an assessment raised. Directors and officers (D&O) liability is designed to respond to claims of wrongful acts in running the association, including defense costs.
In California, Civil Code 5800 shields volunteer officers and directors of a residential or mixed-use association (tenants there, or owners of no more than two separate interests) from personal liability, beyond the insurance, to people injured by their tortious acts or omissions, when the acts were within their association duties, in good faith and not willful, wanton or grossly negligent. It applies only if the association carries general liability and officer and director liability coverage of at least $500,000 (100 or fewer separate interests) or $1 million (more than 100).
Crime or fidelity coverage for the association’s money
Crime or fidelity coverage is designed to reimburse the association when its funds are stolen by directors, officers or employees, and, when the policy includes it, by the management company. Requirements vary by state:
- California. Civil Code 5806 requires coverage for directors, officers and employees of at least the reserves plus three months of total assessments, unless the governing documents require more. It must include computer fraud and funds transfer fraud in an equal amount, must cover a managing agent’s dishonest acts if the association uses one, and self-insurance does not count.
- Florida. Condo associations must insure or bond everyone who controls or disburses association funds, for the maximum funds in the association’s or manager’s custody at any one time.
- Fannie Mae. Condo projects generally need fidelity/crime coverage covering the management agent’s acts, at least three months of assessments on all units when certain financial controls are in place, otherwise the maximum funds in the HOA’s or manager’s custody at any time. Projects of 20 units or fewer are exempt.
Workers’ comp, umbrella and the rest
- Workers’ comp. If the association has its own employees, state workers’ comp rules apply, and they vary by state. If the staff are on a management company’s payroll instead, ask for proof that the company carries its own.
- Umbrella or excess liability. Adds limits above general liability and the other liability policies it schedules.
- Others, depending on the property: flood or earthquake coverage, equipment breakdown for elevators and boilers, and hired and non-owned auto if volunteers or staff drive on association business.
How the master policy and owners’ policies fit together
Whatever the CC&Rs leave to owners (interior finishes under a bare-walls policy, upgrades under a policy that excludes improvements, and personal belongings and personal liability in every case) belongs on the owner’s HO-6 or homeowners policy. For loans it buys, Fannie Mae requires a unit owner’s policy when any part of the unit’s interior or improvements isn’t covered by the master policy, or when the master policy has a per-unit deductible.
When a loss runs past the master policy’s limits, the association can levy a special assessment on its owners. Loss assessment coverage on the owner’s policy is designed for that. When I review an association’s program, I read the insurance article of the CC&Rs alongside the master policy so the board can tell owners exactly where their part starts. How the master policy and HO-6 divide a loss, what loss assessment coverage is and HOA insurance.
Common questions
Is an HOA required by law to carry insurance?
It varies by state, and the CC&Rs or declaration usually set their own requirements. California’s Civil Code 5806, for example, requires associations to carry crime or fidelity coverage, and Florida requires condo associations to insure or bond everyone who controls or disburses association funds.
Does the master policy cover the inside of my unit?
Only if the governing documents and the policy say so. An all-in policy includes interior finishes; under a bare-walls policy they are the owner’s to insure on an HO-6.
What does D&O cover for an HOA board?
It is designed to respond to claims that the board made a wrongful decision in running the association, such as rule enforcement or contract disputes, including defense costs. Injuries on the property belong to general liability.
Does a small HOA need crime coverage?
Theft risk doesn’t shrink with size. California’s Civil Code 5806 sets no unit-count threshold, while Fannie Mae exempts condo projects of 20 units or fewer from its own fidelity/crime standard.
What should the board have ready for a quote?
The insurance article of the CC&Rs, current policies and loss runs, the number of units and buildings and their construction, the reserve balance and annual assessments, and whether you use a management company.
Sources
- California Civil Code § 5800 (text via California Public Law, from leginfo.legislature.ca.gov): volunteer officer and director liability and required insurance
- California Civil Code § 5805 (text via California Public Law, from leginfo.legislature.ca.gov): owner liability for common area held as tenants in common
- California Civil Code § 5806 (text via California Public Law, from leginfo.legislature.ca.gov): association crime and fidelity coverage
- The 2026 Florida Statutes § 718.111(11): condominium association insurance
- Fannie Mae Selling Guide B7-3-03 (08/05/2026): master property insurance requirements for project developments
- Fannie Mae Selling Guide B7-3-04 (08/05/2026): individual property insurance requirements for a unit in a project development
- Fannie Mae Selling Guide B7-4-01 (08/05/2026): general liability insurance requirements for project developments
- Fannie Mae Selling Guide B7-4-02 (08/05/2026): fidelity/crime insurance requirements for project developments
- Washington Office of the Insurance Commissioner: Learn how condo insurance works
General information about homeowners and condominium association insurance as of October 2026, not legal advice; your governing documents, your state’s law and the policies themselves control. Coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.