Hawaii HOA Insurance Requirements

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

Hawaii imposes a prescriptive statutory insurance mandate on condominiums through the Hawaii Condominium Property Act, HRS § 514B-143, while non-condominium planned communities stay declaration-driven, and hurricane and volcanic exposures — not the statute — shape the real insurance market.² HRS § 514B-143 requires a condominium association to purchase property insurance on the common elements (and, for attached-unit buildings, the units and limited common elements to the extent reasonably available), commercial general liability insurance, a fidelity bond, and directors-and-officers coverage, and it allocates deductibles, proceeds, and loss between the association and unit owners.² Older condominiums created before July 1, 2006 formed under the predecessor Horizontal Property Act, HRS ch. 514A, which was repealed effective January 1, 2019, so chapter 514B now applies to all Hawaii condominiums regardless of creation date.¹ Non-condominium planned communities fall under HRS ch. 421J, which holds no comprehensive statutory insurance mandate comparable to § 514B-143, leaving their coverage to the recorded declaration.¹ Unlike many states, Hawaii addresses fidelity and D&O coverage directly in the condominium statute, though both remain subject to variation by the declaration or bylaws.² The distinctive market pressure comes from catastrophe exposure: hurricane risk that produced the Hawaii Hurricane Relief Fund after Hurricane Iniki (1992), and volcanic lava-flow risk rated by USGS Lava Zones, both distinct from any statutory coverage mandate.⁴⁶ Hawaii therefore sits among the comprehensive prescriptive condominium states, apart from the UCA/UCIOA states and the CC&R-primary states, but with unusual catastrophe exposure layered on top. The sections ahead lay out the statutory framework, how coverage gets allocated, and what's happened recently.

Section 2: The statutory insurance framework

2A. The Condominium Property Act insurance section (HRS § 514B-143)

HRS § 514B-143 provides that, unless otherwise provided in the declaration or bylaws, a condominium association "shall purchase and at all times maintain" property insurance on the common elements, providing coverage for special-form causes of loss, in a total amount no less than the full insurable replacement cost of the insured property, less deductibles, but including coverage for the increased costs of construction due to building-code requirements, measured at the time the insurance is purchased and at each renewal date.² Where a building contains attached units, that property insurance, to the extent reasonably available, must include the units and the limited common elements — except as the board otherwise determines — in addition to the common elements; the coverage doesn't need to extend to improvements and betterments unit owners installed, and if it does, any increased cost may get assessed against the affected units.² The section also requires commercial general liability insurance against claims arising in connection with the ownership, existence, use, or management of the property, at a minimum of $1,000,000, or a greater amount the board deems sufficient.²

On the allocation and deductible questions, the statute runs specific. On a claim for damage to a unit or the common elements, the board may pay the deductible as a common expense, or, after notice and an opportunity for a hearing, assess the deductible against the owners who caused the damage or from whose units the loss originated.² The association adjusts a loss covered by the property policy, and the proceeds go to the association or to a designated insurance trustee, who holds them in trust for unit owners and secured parties as their interests may appear.² A unit owner's liability includes the deductible of the owner whose unit was damaged, any damage the required insurance doesn't cover, and interior finishes such as decorating, painting, wall and floor coverings, trim, appliances, equipment, and other furnishings.²

Chapter 514B holds no freestanding statutory rebuild command comparable to some mainland condominium statutes; the obligation to reconstruct after a casualty flows from the proceeds-in-trust provision and from the recorded declaration and bylaws.² As for what the declaration may change, the coverage requirements in subsection (a) come prefaced by "unless otherwise provided in the declaration or bylaws," so they operate as defaults the governing documents may modify, and subsection (h) permits the section to be varied or waived for projects where all units are restricted to nonresidential use.² By contrast, subsection (e) states that flood insurance "shall be maintained" if the property sits in a special flood hazard area on FEMA flood maps and that the policy shall comply with the National Flood Insurance Program — framed as a flat obligation rather than a default.²

2B. Older condominiums, chapter 514A, and planned communities

Condominiums created before July 1, 2006 originally organized under the Horizontal Property Act, HRS ch. 514A. Chapter 514A was repealed effective January 1, 2019, and chapter 514B now applies to all condominiums regardless of their creation date, provided the application doesn't invalidate existing provisions of the declaration, bylaws, or condominium map where doing so would impair a developer's reserved rights.¹ The practical consequence: a manager or attorney analyzing an older Hawaii condominium applies § 514B-143 to the association's insurance obligations while reading the recorded documents for any surviving variations. Non-condominium planned communities answer to the Planned Community Associations law, HRS ch. 421J, which imposes no comprehensive statutory insurance mandate comparable to § 514B-143; those associations' coverage obligations run off the declaration.¹ The Hawaii Real Estate Commission, within the Department of Commerce and Consumer Affairs, administers condominium project and association registration and condominium education; it doesn't dictate the coverage an association must carry.⁷ The first analytical step, then, is to classify the community and confirm the governing chapter before analyzing obligations.

2C. The declaration, corporate law, and the catastrophe and federal overlay

Because § 514B-143(a) applies only "unless otherwise provided in the declaration or bylaws," the recorded declaration interacts directly with the statute and may reallocate coverage responsibility, subject to the flood provision in subsection (e).² Fidelity and D&O coverage get addressed in the statute itself: an association with more than five dwelling units must maintain a fidelity bond equal to $500 multiplied by the number of units — not less than $20,000 nor greater than $200,000 — and the board must obtain D&O liability coverage at a level it deems reasonable unless the declaration or bylaws limit it.² Separately, the Hawaii Nonprofit Corporations Act, HRS ch. 414D, permits a corporation to indemnify directors and officers and to purchase insurance on their behalf, but it doesn't mandate that coverage.³ The Fannie Mae fidelity guideline — coverage at least equivalent to three months of aggregate assessments on all units plus the total amount of the association's reserve funds — is a lender guideline, not Hawaii law; notably, Fannie Mae's Selling Guide accepts a state's statutory fidelity requirement in place of its own where one exists.⁵

The catastrophe context is where Hawaii's market diverges most from its statute. Hurricane risk led the legislature to create the Hawaii Hurricane Relief Fund, HRS ch. 431P, in 1993 after Hurricane Iniki devastated Kauai in 1992; the fund had insured roughly 155,000 policyholders by 1999, stopped writing new hurricane property policies effective December 1, 2000, and sat dormant with reserves later reported at about $170 million until Governor Josh Green reactivated it in 2024 to address a condominium insurance crisis in which the governor's office stated premiums in some cases had risen by up to 1,000%.⁴ Volcanic lava-flow risk gets rated by USGS Lava Zones, and in the two highest-risk zones private carriers have largely withdrawn — State Farm, for example, stopped writing policies in the two highest-risk lava zones in the 1990s — as the 2018 Kilauea eruption in the Puna district (Leilani Estates, in USGS lava-flow hazard Zone 1) illustrated, when roughly 200 homes in the subdivision were destroyed and standard policies frequently excluded lava damage.⁶ These stay market and historical mechanisms, not statutory HOA coverage mandates. Layered above all of this sits the federal and secondary-market overlay: Fannie Mae, Freddie Mac, FHA project approval, and the NFIP impose their own conditions on associations whose units are financed conventionally or through FHA, with the NFIP relevant to tsunami and coastal-flood exposure in special flood hazard areas.⁵²

Section 3: Coverage allocation and compliance obligations

A. Association coverage obligations

For condominiums, HRS § 514B-143 requires the association to maintain property insurance on the common elements at not less than full insurable replacement cost less deductibles, plus special-form coverage and, for attached-unit buildings, coverage of the units and limited common elements to the extent reasonably available — a statutory mandate subject to variation by the declaration or bylaws.² The association must also carry commercial general liability insurance of at least $1,000,000, a statutory mandate.² For planned communities under HRS ch. 421J, the declaration typically dictates what the association insures, and no statutory floor exists.¹

B. Coverage allocation between association and owners

Under § 514B-143(b), the association's property policy reaches the units and limited common elements in attached-unit buildings but doesn't need to cover owner-installed improvements and betterments, which places responsibility for upgrades, interior finishes, and personal property on the owner — a statutory allocation.² Owners commonly fill the gap with a unit-owner policy — an HO-6 — covering improvements, personal property, and loss assessments, a contractual and lender-driven practice rather than a state mandate, though the board may require unit owners to carry reasonable insurance with the vote or written consent of a majority of owners (§ 514B-143(g)).²

C. Deductibles, proceeds, and reconstruction

The board's deductible options — pay as a common expense, or assess the responsible owner after notice and a hearing — sit in § 514B-143(d), a statutory rule.² The association adjusts proceeds and holds them in trust for owners and secured parties under § 514B-143(f); the duty to rebuild flows from that provision and the declaration rather than a separate statutory command.² Owner loss-assessment exposure follows from § 514B-143(g). The operational reality: hurricane deductibles and Lava Zone availability constraints, not the statute, make funding a loss difficult in exposed communities. The legislature found that "condominium building master property insurance policy premiums have increased exponentially, with insurers increasing deductible amounts from what used to be between $10,000 to $25,000 per unit, per occurrence, to as much as $250,000."⁸

D. Fidelity, D&O, and disclosure

Fidelity coverage carries a statutory mandate for associations with more than five dwelling units (§ 514B-143(a)(3)), and D&O coverage runs as a statutory board duty subject to the declaration (§ 514B-143(a)(4)).² The property policy must contain a provision requiring the carrier to give the board a plain-language written summary of the policy at inception and on each anniversary, and the board must pass that information to each unit owner — a statutory disclosure obligation.⁹ Additional disclosure of the master policy or a certificate to purchasers and lenders is typically driven by the declaration and by secondary-market requirements.⁵

Section 4: Recent legislative and judicial activity

A. Recent bills

B. Recent appellate rulings

C. Active legislative debates

Insurance Commissioner Scott K. Saiki issued Commissioner's Memorandum 2026-4PC requiring residential hurricane insurers to complete a data call by May 4, 2026 to assess whether the reactivated HHRF should extend to single-family homes, and the Commissioner's Act 296 study reports to the Legislature come due in 2026 and 2027; separate proposals to subsidize lava-zone premiums remained under discussion in the 2026 session.¹²

Section 5: National positioning and related coverage

Hawaii belongs to the first of three broad categories of association insurance regulation: comprehensive prescriptive states with detailed statutory insurance regimes, alongside Florida (Chapter 718) and California (Davis-Stirling), rather than the UCA or UCIOA condominium-mandate states keyed to Section 3-113, or the CC&R-primary states such as Alabama and Arkansas. Its distinctive features run to a prescriptive condominium insurance section (HRS § 514B-143) that expressly reaches property, liability, fidelity, and D&O coverage, a declaration-driven planned-community sector under HRS ch. 421J, and unusual catastrophe exposure — hurricane risk and the Hawaii Hurricane Relief Fund legacy, plus volcanic Lava Zone risk. For a multi-state operator entering Hawaii, the practical implication is that the § 514B-143 mandate is prescriptive and can't be assumed away, planned communities stay declaration-driven, and hurricane deductibles and Lava Zone availability are constraints specific to this state on obtaining adequate coverage. Current legislative momentum centers on catastrophe-insurance stabilization through the HHRF and the Condominium Loan Program rather than on amending the coverage section itself.

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

1. Hawaii Revised Statutes ch. 514B (Condominiums), transition provisions on repeal of ch. 514A and application to preexisting condominiums; Planned Community Associations, HRS ch. 421J ↩
2. HRS § 514B-143, Insurance (Hawaii State Legislature) ↩
3. HRS ch. 414D, Hawaii Nonprofit Corporations Act (§§ 414D-160 to 414D-166, indemnification and insurance) ↩
4. Hawaii Hurricane Relief Fund (HRS ch. 431P), Hawaii Insurance Division, DCCA ↩
5. Fannie Mae Selling Guide B7-3-03, Master Property Insurance Requirements; B7-4-02, Fidelity/Crime Insurance Requirements (lender requirements) ↩
6. Lava Flow Insurance Information, Hawaii Insurance Division, DCCA ↩
7. Hawaii Real Estate Commission / Real Estate Branch, DCCA (condominium registration and education) ↩
8. SB1044 CD1 (2025) legislative findings on condominium master-policy deductibles ↩
9. HRS § 514B-143, plain-language policy summary disclosure to the board and unit owners ↩
10. DCCA news release, Act 296 (SB1044) signed July 7, 2025; bill text at capitol.hawaii.gov (SB1044 CD1) ↩
11. AOAO Queen Emma Gardens v. Ma, No. CAAP-18-0000717 (Haw. Ct. App. Dec. 19, 2023) (memorandum opinion), Hawaii Judiciary opinions portal ↩
12. Commissioner's Memorandum 2026-4PC, Hurricane Insurance Data Call, Hawaii Insurance Division, DCCA ↩