Arkansas HOA Insurance Requirements

Section 1 — Overview: How HOA insurance is regulated in Arkansas

Arkansas regulates condominium insurance through a traditional Horizontal Property Act that barely touches the subject, and it imposes no statutory insurance mandate on planned communities at all — they rely entirely on the recorded declaration. Condominiums answer to the Arkansas Horizontal Property Act, Ark. Code § 18-13-101 et seq., a horizontal property statute Arkansas enacted in 1961 rather than a modern uniform act.² Whatever insurance provision the Act contains stays traditional and thin: Section 18-13-117 permits, but doesn't require, the co-owners to insure the building, leaving the master deed and bylaws to carry the operational detail.¹

Non-condominium planned communities have no dedicated statute and no statutory insurance mandate. Their insurance runs off the recorded covenants, conditions, and restrictions, with corporate-formality scaffolding from the Arkansas Nonprofit Corporation Act of 1993 wherever the association incorporates.⁵ Fidelity (crime) and directors-and-officers coverage carry no statutory mandate in Arkansas; declarations or lenders drive them instead.⁴ Because the statute offers so little, the lender and federal layer — Fannie Mae, Freddie Mac, FHA, and the National Flood Insurance Program — frequently sets the effective coverage floor for financed condominiums.³

Nationally, Arkansas sits at the lighter-touch end: a CC&R-primary state for planned communities and a traditional-statute state for condominiums, apart from both the UCA/UCIOA condominium-mandate states and prescriptive states like Florida and California. The sections ahead map the statutory framework, how coverage gets allocated, and what's happened recently.

Section 2 — The statutory insurance framework

2A. The Horizontal Property Act and its insurance treatment

Condominium insurance in Arkansas runs through the Horizontal Property Act, Ark. Code § 18-13-101 et seq., enacted as Acts 1961 (1st Ex. Sess.), No. 60.² The Act is a traditional horizontal property statute — not the 1980 Uniform Condominium Act, not the 1982 Uniform Common Interest Ownership Act. That distinction drives the whole insurance analysis, because the modern uniform-act insurance architecture simply isn't in the Arkansas statute.

The only general insurance provision, Section 18-13-117 ("Insurance generally"), reads in full: "The co-owners may, upon resolution of a majority, insure the building against risk, without prejudice to the right of each co-owner to insure his or her apartment on his or her own account and for his or her own benefit."¹ The provision is permissive, not mandatory. It authorizes the co-owners to insure the building and preserves each owner's right to insure the individual unit, but it never requires the association to carry any coverage. Section 18-13-118 then directs how insurance proceeds get applied to reconstruction, and Section 18-13-119 covers funding when the building sits uninsured or the indemnity falls short.⁶

Don't read presence into what the Act leaves out. There's no replacement-cost valuation mandate, no commercial general liability requirement, no "reasonably available" qualifier, no improvements-and-betterments exclusion, and no structured deductible-allocation scheme like the one in UCA Section 3-113.¹ Because the statute stops at authorization and proceeds-application, the master deed and bylaws end up carrying the operational detail: what to insure, at what value, against what perils, and who bears the deductible.

2B. Planned communities and the absence of a statutory mandate

Non-condominium planned communities in Arkansas have no dedicated common-interest statute and no statutory insurance mandate. Insurance runs entirely off the recorded declaration and CC&Rs.⁸ For condominiums, the order of precedence runs from the Act — to the limited extent it even speaks to insurance — then the master deed or declaration, then the bylaws, then the rules. For planned communities, the declaration takes the lead, with no overriding insurance statute above it.

Where an association incorporates, the Arkansas Nonprofit Corporation Act of 1993, Ark. Code § 4-33-101 et seq., supplies corporate governance, including director standards of conduct and the authority to indemnify directors and officers.⁵ That's a corporate-governance statute, not an HOA statute and not an insurance mandate — it permits indemnification but never requires the association to buy insurance. The practical takeaway is direct: for a planned community, coverage analysis starts and ends with the declaration and whatever lenders require.

2C. Fidelity, D&O, and the federal overlay that often sets the floor

Fidelity (crime) and D&O coverage carry no statutory mandate in Arkansas. Declarations or lenders drive them instead, and no section of the Horizontal Property Act requires either.⁴ In practice, the binding requirements usually come from the federal and secondary-market layer. Fannie Mae's Selling Guide requires master property insurance "at least equal to 100% of the replacement cost value of the project improvements," settled on a replacement cost basis — policies settling on an actual cash value basis don't qualify — and it caps the master-policy deductible at 5% of the coverage amount.³ Freddie Mac's Seller/Servicer Guide imposes parallel requirements, and FHA condominium project approval demands hazard, liability, fidelity, and, in Special Flood Hazard Areas, flood coverage.⁹

Watch for the error that keeps recurring: treating Fannie Mae's fidelity guideline as if it were Arkansas law. Under Fannie Mae Selling Guide B7-4-02, fidelity/crime coverage must equal "at least...the sum of three months of assessments on all units in the project" where financial controls are met, and it's not required for "condo or co-op projects consisting of 20 units or less, or...coverage of $5,000 or less"; FHA sets a parallel three-months-plus-reserves standard.⁴ These are lender guidelines, not a statute. The Arkansas-specific point stands: because the Act offers so little, the lender/federal layer frequently sets the binding coverage floor for financed condominiums — master property adequacy, fidelity, and flood insurance in Special Flood Hazard Areas. That layer reaches planned communities too, which carry no statutory floor whatsoever.

Section 3 — Coverage allocation and compliance obligations

A. Association coverage obligations

For condominiums, the Act authorizes but doesn't require the association — acting through the co-owners by majority resolution — to insure the building; any binding requirement to carry coverage comes from the master deed and, for financed projects, from lenders.¹ The master deed and bylaws typically fill in the property-coverage scope, valuation basis, and liability limits the statute leaves out. For planned communities, the association's obligations run entirely off the CC&Rs, contractual with no statutory floor.⁸

B. Coverage allocation between association and owners

The error readers make most often: assuming the master policy covers the unit interior or owner improvements. Under Section 18-13-117, each co-owner keeps the right to insure the individual unit; the master deed draws the boundary between the master policy and owner responsibility for the interior, improvements and betterments, and personal property.¹ Owners commonly close that gap with an individual unit-owner policy — an HO-6 — plus loss-assessment coverage. Where a master policy doesn't reach the unit interior, Fannie Mae and FHA require the borrower to carry an HO-6 "walls-in" policy.³ This allocation runs contractual, through the master deed for condominiums and the CC&Rs for planned communities — statute sets none of it.

C. Deductibles, proceeds, and repair-or-replace

The Act sets no deductible-allocation rule at all; who bears the deductible comes down to the declaration, while the lender layer caps the master-policy deductible at 5% of the coverage amount for financed projects.¹ For condominiums, Section 18-13-118 directs that, in case of fire or other disaster, the insurance indemnity go toward reconstructing the building — except reconstruction isn't compulsory when the damage covers the whole building or more than two-thirds of it, in which case the indemnity goes pro rata to the co-owners unless they unanimously agree otherwise.⁶ Section 18-13-119 covers owner loss-assessment exposure: where the building sits uninsured or the indemnity falls short, reconstruction costs land on the affected co-owners in proportion to unit value, or however the bylaws provide.⁷ The Arkansas statute holds no UCA-style deductible-allocation rule and no UCIOA owner-charge authority. For planned communities, the declaration governs these questions entirely.

D. Fidelity, D&O, and disclosure

Fidelity and D&O coverage stay declaration- or lender-driven rather than statutory, for both condominiums and planned communities.⁴ The Act's disclosure mechanism is simply the public record: the master deed and bylaws must be recorded, which gives owners, purchasers, and lenders access to the governing instruments that define coverage.¹⁰ The Act holds no condominium-specific resale certificate or insurance-disclosure statute of the kind comprehensive states write; for financed transactions, lenders get evidence of the master policy and certificates directly through Fannie Mae and FHA documentation rules.³

Section 4 — Recent legislative and judicial activity

A. Recent bills

Senate Bill 323, signed into law as Act 516 of 2025, stands as the only recent measure amending the condominium statute.

B. Recent appellate rulings

No published decision from the Arkansas Court of Appeals or the Arkansas Supreme Court in the past 36 months addresses condominium or planned-community association insurance obligations, coverage allocation, deductible disputes, or proceeds/rebuild questions under the Horizontal Property Act. Trial-level coverage disputes move through Arkansas circuit courts, with appeals going to the single Arkansas Court of Appeals and discretionary review sitting with the Arkansas Supreme Court.¹³

C. Active legislative debates

No active proposal would enact a comprehensive planned-community statute in Arkansas, and no bill is pending to bring the Horizontal Property Act fully onto the UCIOA model beyond the incremental modernization Act 516 already achieved. The real pressure on Arkansas association insurance right now is market-driven: severe thunderstorms, tornadoes, and hail pushed statewide homeowners rates up by an average of 15 to 20 percent in 2024, and storm losses drove carriers such as United Home Insurance of Paragould into receivership, handled through the state's property and casualty guaranty fund.¹⁴

Section 5 — National positioning and related coverage

Arkansas sits within three broad categories of association insurance regulation. The first covers condominium-statute states on the UCA/UCIOA model, which impose a detailed statutory condominium insurance mandate keyed to Section 3-113 — replacement cost, liability minimums, structured deductible allocation. The second covers comprehensive non-UCIOA states with prescriptive insurance and reserve statutes, Florida (Chapter 718, with its structural-inspection and reserve requirements) and California (Davis-Stirling) chief among them. The third covers CC&R-primary and traditional-statute states such as Arkansas, Alabama, and Mississippi, where planned communities carry no statutory insurance mandate — and in Arkansas, condominiums fall under a traditional Horizontal Property Act that's thin on insurance. Arkansas sits at the lighter-touch end: a traditional condominium statute rather than a modern uniform act, and no planned-community statute at all. For a multi-state operator entering Arkansas, the practical implication runs clear — condominium coverage is driven by the master deed and lender requirements more than by the statute, and planned-community coverage is entirely declaration-driven. Arkansas has taken one incremental step toward modernizing the Horizontal Property Act, Act 516 of 2025, but hasn't enacted a comprehensive planned-community statute.

HOA Weekly updates its Arkansas Insurance Requirements coverage quarterly, tracking the legislature, the Arkansas appellate courts, and shifts in the property-insurance market. Federal frameworks — Fannie Mae, Freddie Mac, FHA, NFIP, and FHA fair-housing accommodation rules — apply to Arkansas associations regardless of the state framework, and a fuller treatment of those rules will follow once that coverage is built out.

1. Ark. Code § 18-13-117 (Insurance generally), Arkansas Horizontal Property Act ↩
2. Arkansas Horizontal Property Act, Acts 1961 (1st Ex. Sess.), No. 60; Ark. Code § 18-13-101 et seq. ↩
3. Fannie Mae Selling Guide B7-3-03, Master Property Insurance Requirements for Project Developments ↩
4. Fannie Mae Selling Guide B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments ↩
5. Arkansas Nonprofit Corporation Act of 1993, Ark. Code § 4-33-101 et seq. ↩
6. Ark. Code § 18-13-118 (Application of insurance proceeds to reconstruction) ↩
7. Ark. Code § 18-13-119 (Sharing of reconstruction costs when building not insured or indemnity insufficient) ↩
8. Arkansas: no single HOA statute; planned communities rely on recorded CC&Rs plus the Nonprofit Corporation Act ↩
9. FHA Condominium Project Approval Questionnaire (Form HUD-9992), hazard, liability, and fidelity insurance ↩
10. Ark. Code § 18-13-104 (Master deed; recording requirement), as amended by Act 516 of 2025 ↩
11. SB323 (2025), enacted as Act 516; Arkansas State Legislature bill page ↩
12. 2025 CAI Arkansas Legislative Session Report ↩
13. Arkansas Judiciary, appellate structure (Court of Appeals; Supreme Court discretionary review) ↩
14. Arkansas Senate, "Legislators Explore Options for Holding Down Insurance Costs" (2024) ↩