Kentucky HOA Insurance Requirements

Kentucky splits association insurance into two statutory tracks: condominiums carry a mandate under the Kentucky Condominium Act at KRS 381.9187, and planned communities formed after June 29, 2023 carry a narrower mandate under the Kentucky Planned Community Act at KRS 381.790, while planned communities formed before that date rely on the recorded declaration.

1. Overview: How HOA insurance is regulated in Kentucky

Condominium associations in Kentucky carry a statutory insurance mandate under the 2010 Kentucky Condominium Act, while planned communities formed before June 29, 2023 have no statutory insurance floor and rely on the recorded declaration.¹ The condominium insurance section is KRS 381.9187, part of the Condominium Act at KRS 381.9101 to 381.9207, which applies to condominiums created on or after January 1, 2011.¹ Planned communities formed after June 29, 2023 are the exception: the Kentucky Planned Community Act, KRS 381.785 to 381.803, added a limited insurance requirement at KRS 381.790, but older planned communities remain governed by their CC&Rs plus the corporate scaffolding of the Kentucky Nonprofit Corporation Act, KRS Chapter 273.² The condominium provision descends from Section 3-113 of the Uniform Condominium Act, and it preserves the model's "reasonably available" condition together with a duty to notify owners if required coverage becomes unavailable.¹ Fidelity (crime) and directors-and-officers coverage carry no statutory mandate in Kentucky; the declaration or lenders drive them instead.⁶ Nationally, Kentucky stands as a modern uniform condominium-mandate state whose planned-community insurance still resembles CC&R-primary states for communities predating mid-2023. The sections ahead lay out the statutory framework, how coverage gets allocated, and what's happened recently.

2. The statutory insurance framework

2A. The condominium insurance mandate

The controlling section is KRS 381.9187, titled "Insurance," which took its current form effective April 11, 2012 — created by 2010 Ky. Acts ch. 97, sec. 44, and amended by 2012 Ky. Acts ch. 99, sec. 7.¹ The section descends from the Section 3-113 insurance model shared by the Uniform Condominium Act, and Kentucky adopted the UCA version rather than UCIOA.³ Starting no later than the first sale of a unit to someone other than a declarant, the association must maintain, to the extent reasonably available, two coverages: property insurance on the common elements against fire and extended coverage perils, and liability insurance, including medical payments coverage, in an amount the executive board sets but never below any amount the declaration specifies.¹ If required insurance isn't reasonably available, the association must immediately notify every unit owner by hand delivery or U.S. mail.¹

The property valuation basis runs specific and differs from the common assumption: the total amount of insurance after any deductibles apply must run no less than 100% of the actual cash value of the insured property at purchase and at each renewal, excluding land, excavations, and other items normally excluded from property policies.¹ The Kentucky text uses actual cash value, not replacement cost, and it doesn't list foundations as a separate exclusion or contain an improvements-and-betterments exclusion. The statute covers the common elements; it doesn't require the master policy to insure the units themselves.

The master policy must provide that each unit owner counts as an insured for liability arising from the common elements or association membership, that the insurer waives subrogation against any unit owner or household member, that no act or omission of a unit owner — unless acting for the association — voids the policy, and that the association's policy sits primary where a unit owner carries other insurance on the same risk.¹ Property-loss proceeds go to an insurance trustee or the association, never to any mortgagee, and sit in trust and get disbursed first for repair or restoration.¹ Any insured portion of the condominium that's damaged must be repaired or replaced promptly by the association unless the condominium terminates, repair would be illegal under a state statute or local health or safety ordinance, or 80% of the unit owners vote against rebuilding; repair or replacement cost above proceeds and reserves becomes a common expense.¹ On the deductible question, KRS 381.9187 references deductibles only within the valuation formula; it contains no provision authorizing the association to charge a deductible to the owner whose loss caused it. That allocation gets left to the declaration. This tracks Kentucky's UCA basis and the absence of the UCIOA 2008 deductible-allocation authority.

2B. Planned communities and the statutory mandate for newer communities

Kentucky historically had no dedicated statute for non-condominium planned communities, and the once-standard assumption that they carry no statutory insurance mandate is only partly correct today. The Kentucky Planned Community Act, enacted as Senate Bill 120 and signed March 20, 2023, created KRS 381.785 to 381.803 and imposes a limited insurance requirement at KRS 381.790: unless the declaration provides otherwise, an association formed after the Act's effective date must, no later than the first sale of a lot, obtain and maintain property insurance on the common areas insured for replacement cost, liability insurance for the common areas, and any other insurance required by the declaration or bylaws.²⁷ By its own terms, that requirement reaches only planned communities formed after the effective date; existing developments without an association that meets the statutory definition sit outside it.⁷

Order of precedence differs by community type. For condominiums, the Condominium Act governs to the extent it speaks to insurance, then the declaration, then bylaws, then rules. For planned communities predating mid-2023, the declaration takes the lead with no overriding insurance statute; for those formed later, KRS 381.790 applies unless the declaration provides otherwise. Where an association incorporates, the Kentucky Nonprofit Corporation Act, KRS Chapter 273, supplies rules for director conduct and indemnification, distinct from any insurance mandate.⁸ The practical implication for an older planned community: its coverage analysis starts and ends with the declaration and any lender requirements.

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

For condominiums, the declaration's power to vary the statutory defaults runs narrow: KRS 381.9187 may be varied or waived only for a condominium where every unit is restricted to nonresidential use.¹ Fidelity and D&O coverage carry no statutory mandate. D&O stands as a permissive association power: KRS 381.9167(1)(m) authorizes a condominium association to provide for indemnification of its officers and board and to maintain D&O liability insurance, but it never requires it.⁶ The Nonprofit Corporation Act permits indemnification of directors and officers but doesn't mandate insurance.⁸ The federal and secondary-market overlay frequently exceeds any state floor. Fannie Mae's Selling Guide requires master property coverage at 100% replacement cost with a deductible no greater than 5%, commercial general liability, and fidelity/crime coverage for most condo and co-op projects, with exceptions including projects of 20 units or fewer and projects whose required coverage would run $5,000 or less; where required, coverage must equal at least three months of assessments on all units — or the maximum funds held, depending on financial controls — and flood insurance is required for units in a Special Flood Hazard Area.⁵ These stay lender and federal requirements, not Kentucky statute, and they also drive coverage decisions for financed units in planned communities that carry no statutory floor. Kentucky's market context reinforces the point: the state's dominant catastrophe exposures run to severe convective storms, tornadoes, and riverine and flash flooding — a burden Governor Andy Beshear summarized in noting that Kentucky faced 15 federally declared weather disasters in six years — and flood loss is typically excluded from standard property policies and insured separately through the National Flood Insurance Program.⁹ Kentucky carries no coastal windstorm exposure. These stay cost and availability factors, not statutory mandates.

3. Coverage allocation and compliance obligations

3A. Association coverage obligations

For condominiums, the master policy must carry property insurance on the common elements at not less than 100% of actual cash value after deductibles and liability insurance in an amount the board sets but never below the declaration figure; both apply to condominiums created on or after January 1, 2011 and run mandatory, subject only to the nonresidential-condominium waiver.¹ For planned communities formed after June 29, 2023, KRS 381.790 requires replacement-cost property insurance on the common areas and common-area liability insurance, unless the declaration provides otherwise; this stands as a statutory obligation for those communities.² For older planned communities, coverage is whatever the declaration requires, with no statutory floor.

3B. Coverage allocation between association and owners

The condominium master policy insures the common elements, not the unit interiors, owner improvements and betterments, or personal property — those stay the owner's responsibility, typically through an individual HO-6 unit policy. This is the error readers make most often: assuming the master policy covers the inside of the unit. Kentucky imposes no statutory requirement that a condominium unit owner buy insurance, though the master policy sits primary where the same risk gets doubly insured.¹ Loss-assessment coverage on the owner's HO-6 handles the owner's share of costs the association passes through, and lenders often require it to cover the owner's share of the master-policy deductible.⁵ This allocation applies to condominiums under the Condominium Act; in planned communities it runs contractual through the CC&Rs.

3C. Deductibles, proceeds, and repair-or-replace

By default under the Condominium Act, the deductible gets absorbed within the master policy's coverage calculation, and the statute doesn't shift it to the owner whose loss caused it; any such allocation has to come from the declaration. Proceeds sit in trust and apply first to repair or restoration, with owners and lienholders paid only from any surplus left after complete repair or termination.¹ The association must rebuild promptly unless a statutory exception applies, and the cost above proceeds and reserves counts as a common expense — the mechanism that creates owner loss-assessment exposure for uninsured amounts.¹

3D. Fidelity, D&O, and disclosure

Fidelity and D&O coverage stay declaration-driven or lender-driven rather than statutory; D&O runs as a permissive power under KRS 381.9167(1)(m), and fidelity is chiefly a Fannie Mae, Freddie Mac, or FHA condition.⁶⁵ On disclosure, the Condominium Act's resale certificate at KRS 381.9203 requires a seller to furnish the buyer a certificate describing the insurance the association maintains, which functions as a transaction-level insurance disclosure.¹⁰ KRS 381.9187(3) also contemplates that the insurer issues certificates or memoranda of insurance, giving owners, purchasers, and lenders access to proof of the master coverage.¹ These obligations apply to condominiums; planned communities disclose per their declarations and, for post-2023 communities, the records provisions of the Planned Community Act.

4. Recent legislative and judicial activity

A. Recent bills

No bill in the 2025 or 2026 sessions was located that amends the condominium insurance section KRS 381.9187 itself.

B. Recent appellate rulings

No published or unpublished Kentucky Court of Appeals or Kentucky Supreme Court decision from 2023 through July 2026 was identified that squarely addresses a community association's insurance obligations, coverage allocation, deductible disputes, or proceeds or rebuild questions under KRS 381.9187 or a planned-community declaration. One 2025 appellate decision naming a community association, Panaretos v. Villas at Claymont Springs Community Association, Inc. (No. 2024-CA-1229-MR, Ky. App. Dec. 5, 2025, not to be published), was reviewed and found to be a restrictive-covenant enforcement dispute over outdoor garbage-can storage, not an insurance case.¹¹ Because no qualifying ruling exists in the window, no case metadata block or audience-implication table is provided here.

C. Active legislative debates

The most material recent pressure on Kentucky association insurance runs market-driven rather than statutory, centered on rising tornado, hail, and severe-convective-storm losses and the cost and availability of property coverage; the FORTIFIED-based resilience approach in HB 256 stands as the primary legislative response to date.

5. National positioning and related coverage

Kentucky sits in the first of three broad categories: condominium-statute states on the UCA/UCIOA model that impose a statutory condominium insurance mandate keyed to Section 3-113, with Kentucky on a modern uniform version enacted in 2010 and effective in 2011.³ A second category comprises comprehensive non-uniform prescriptive states, notably Florida — whose Chapter 718 requires property coverage based on the replacement cost of the insured property as determined by an independent insurance appraisal or update, redetermined at least once every 36 months — and California (Davis-Stirling).¹² A third comprises CC&R-primary states such as Alabama and Arkansas. On the planned-community question, Kentucky resembles the CC&R-primary states for communities formed before mid-2023, while its post-2023 planned communities now carry a modest statutory floor, and older condominiums may remain under the predecessor Horizontal Property Law (KRS 381.805 to 381.910), which treats association insurance as permissive rather than mandatory.⁴ For a multi-state operator entering Kentucky, the practical implication is to treat condominiums and post-2023 planned communities as governed by statute and every older HOA as governed by its declaration. Kentucky has amended KRS 381.9187 once, in 2012, and hasn't changed the condominium insurance provision since.¹

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

1. KRS 381.9187, Insurance (Kentucky Condominium Act) ↩
2. KRS 381.790, Budget - Assessments - Insurance - Financial records (Kentucky Planned Community Act) ↩
3. Uniform Condominium Act, Section 3-113 (Insurance) ↩
4. KRS 381.885, Insurance (Kentucky Horizontal Property Law) ↩
5. Fannie Mae Selling Guide B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments ↩
6. KRS 381.9167, Powers of unit owners' association (D&O indemnification power) ↩
7. 2023 Ky. Acts ch. 23 (SB 120), Kentucky Planned Community Act ↩
8. KRS Chapter 273, Kentucky Nonprofit Corporation Act ↩
9. Kentucky General Assembly, HB 256 (2024 Regular Session) ↩
10. KRS Chapter 381, including 381.9101 to 381.9207 and 381.9203 ↩
11. Kentucky Court of Appeals, December 5, 2025 Minutes (Panaretos v. Villas at Claymont Springs, No. 2024-CA-1229-MR) ↩
12. Fla. Stat. 718.111(11), condominium insurance (comparative) ↩