Montana HOA Insurance Requirements

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

Montana regulates condominium insurance through a traditional horizontal property act that is thin on insurance, and it imposes no statutory insurance mandate on planned communities, which depend entirely on their recorded declarations. Condominiums are governed by the Montana Unit Ownership Act, Mont. Code § 70-23-101 et seq., a statute first enacted in 1965 and structured as a traditional horizontal property act rather than a modern uniform act.¹ The Act's only insurance provision, § 70-23-612, is permissive and brief: it directs the manager to insure the building against fire and other hazards only if the declaration, the bylaws, or a majority of owners require it, which means the master deed or declaration and the bylaws carry the operational detail.¹ Planned communities have no dedicated statute and therefore no statutory insurance requirement; their coverage obligations come from the CC&Rs, with corporate scaffolding from the Montana Nonprofit Corporation Act, Mont. Code § 35-2-113 et seq., where the association is incorporated.²⁵ Fidelity (crime) coverage and directors-and-officers (D&O) coverage aren't statutory mandates in Montana; they're driven by the declaration or by lender requirements.⁶ For financed condominiums, secondary-market and federal requirements often set the effective coverage floor precisely because the statute provides so little.⁴ Within the national framework, Montana sits at the lighter-touch end: a CC&R-primary state for planned communities and a traditional-statute state for condominiums, distinct both from UCA and UCIOA condominium-mandate states and from comprehensive prescriptive states such as Florida and California. The sections that follow set out the statutory framework, the coverage-allocation map, and the recent activity that bears on association insurance.

Section 2: The statutory insurance framework

2A. The Montana Unit Ownership Act and its insurance treatment

Condominium insurance in Montana is governed by the Montana Unit Ownership Act, Mont. Code § 70-23-101 et seq., which applies only to properties that record a declaration submitting them to the Act.³ The Act is a traditional horizontal property statute enacted in 1965 and doesn't descend from the 1980 Uniform Condominium Act (UCA) or the 1982 Uniform Common Interest Ownership Act (UCIOA). That lineage matters, because the modern uniform acts contain a detailed insurance section (Section 3-113) and the Montana Act doesn't.¹

The Act's single insurance provision is § 70-23-612. It provides that the manager, as trustee for the unit owners, "shall, if required by the declaration, by the bylaws, or by a majority of the unit owners, insure the building against loss or damage by fire and other hazards," without prejudice to each owner's right to insure the owner's own unit, and that the premiums for building insurance are common expenses.¹ The obligation is therefore conditional rather than freestanding: the Act supplies a trustee mechanism and a common-expense funding rule, but the duty to insure is triggered by the governing documents or an owner vote, not imposed by the statute itself.

What the Act doesn't contain is as important as what it does. There's no replacement-cost valuation mandate, no commercial general liability insurance requirement, no "reasonably available" qualifier, no improvements-and-betterments exclusion, and no structured deductible-allocation scheme. Those are all features of UCA/UCIOA Section 3-113, and none of them appear in the Montana Act.¹ The Act does address the aftermath of a casualty in its removal-from-chapter provisions: under § 70-23-803, if the association doesn't decide within 60 days after damage to or destruction of all or part of the property to repair, reconstruct, or rebuild, the property is considered removed from the Act, after which the property — and any insurance proceeds — is handled through the wind-down and partition provisions of Part 8.⁷ Because the statutory treatment is so thin, the master deed or declaration and the bylaws do the operational work for condominium insurance in Montana: they set what must be covered, on what valuation basis, at what limits, and how deductibles and proceeds are handled.

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

Non-condominium planned communities in Montana have no dedicated statute and no statutory insurance mandate. Their insurance obligations are set entirely by the recorded declaration (the CC&Rs).² Montana has no general planned-community act comparable to its condominium statute, so there's no state-law floor to consult; the analysis begins and ends with the declaration and any applicable lender requirements.

The order of precedence differs by community type. For a condominium, the hierarchy runs from the Act — to the limited extent § 70-23-612 and the casualty provisions speak to insurance — then the recorded master deed or declaration, then the bylaws, then the rules.¹ For a planned community, the declaration is the primary source, with no overriding insurance statute above it.

The Montana Nonprofit Corporation Act, Mont. Code § 35-2-113 et seq., supplies corporate-formality scaffolding where the association is incorporated, which is the ordinary structure for Montana associations. It governs matters such as director conduct and indemnification: § 35-2-447 authorizes — but doesn't require — a corporation to indemnify directors who meet the statutory standard of conduct, and § 35-2-453 authorizes — but doesn't require — a corporation to purchase D&O insurance.⁵⁶ These are corporate-governance provisions, not insurance mandates, and they apply to the corporation's directors and officers rather than to property or liability coverage of the community. The practical consequence for a planned community is direct: the coverage analysis is a reading of the declaration against the association's lender and federal obligations, not a search for a statutory requirement.

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

Fidelity (crime) insurance and D&O liability insurance aren't statutory mandates in Montana. The Unit Ownership Act doesn't require either, and the Nonprofit Corporation Act only permits indemnification and D&O insurance rather than requiring them.⁶ Where an association carries fidelity or D&O coverage, that obligation comes from the declaration or from a lender.

The federal and secondary-market overlay frequently supplies the binding requirements the statute omits. These are lender or federal requirements, not Montana law. Fannie Mae Selling Guide B7-4-02 requires fidelity/crime insurance for "all condo and co-op projects," with exceptions for projects qualifying for a waiver of project review (B4-2.1-02), those reviewed under the Limited Review method (B4-2.2-01), "condo or co-op projects consisting of 20 units or less," or projects needing coverage of "$5,000 or less."⁴ For master property coverage, Fannie Mae Selling Guide B7-3-03 requires coverage at least equal to 100% of the replacement cost value of the project improvements, including common elements and residential structures, settled on a replacement-cost — not actual-cash-value — basis, with the maximum allowable deductible capped at 5% of the coverage amount.¹¹ Freddie Mac imposes parallel requirements under Seller/Servicer Guide Section 4703.2, "Minimum Property Insurance Types and Amounts," which Fannie Mae aligned to effective February 7, 2024 — mandating replacement-cost claim settlement, a "Special" coverage form, and a 5% maximum deductible.¹¹ The National Flood Insurance Program (NFIP) offers the Residential Condominium Building Association Policy (RCBAP) for residential condominium buildings, with building coverage capped at the lesser of 100 percent of the replacement cost value of the building or the total number of units in the condominium building times $250,000, subject to an 80% coinsurance requirement; flood insurance is mandatory for federally backed loans on property in a Special Flood Hazard Area (SFHA).¹⁰ For a financed Montana condominium, this layer often sets the real coverage floor for fidelity coverage, master-policy adequacy, and flood coverage, because the Act requires none of it. The overlay applies to planned communities as well, which have no statutory floor at all.

Montana's insurance market shapes the coverage decisions that sit on top of these legal requirements, though market pressure is not a statutory mandate. Wildfire in the wildland-urban interface is the dominant catastrophe concern and has driven property-insurance cost and availability pressure in forested and foothill communities.¹² Severe winter perils — heavy snow load, ice, and frozen pipes — are a major claim source, and western Montana carries seismic exposure, with earthquake loss typically excluded from standard policies and purchased separately. Riverine and flash flooding bring the NFIP into play in SFHAs. Montana has no coastal windstorm exposure. These factors affect price and availability; they don't create statutory HOA coverage obligations.

Section 3: Coverage allocation and compliance obligations

A. Association coverage obligations

For condominiums, the Act requires the association's manager to insure the building against fire and other hazards, but only when the declaration, the bylaws, or a majority of owners so require (§ 70-23-612); the statute doesn't independently compel coverage, so the master deed typically supplies the actual mandate, scope, and limits.¹ Premiums for building insurance are common expenses funded through assessments (§ 70-23-612; § 70-23-102).⁸ For planned communities, all association coverage obligations are contractual under the CC&Rs, because no statute imposes a floor.²

B. Coverage allocation between association and owners

Under § 70-23-612 the association's building policy doesn't displace an owner's right to insure the owner's own unit, which frames the customary Montana split: the master policy — as defined by the master deed — covers the building and common elements, while the individual owner is responsible for the unit interior, improvements and betterments, and personal property, typically through an individual unit-owner (HO-6-type) policy.¹ This allocation is contractual, set by the master deed for condominiums and by the declaration for planned communities; the Act doesn't itself define a "walls-in" versus "walls-out" line. The most common reader error is assuming the master policy covers the unit interior or owner improvements; in Montana that boundary is drawn by the governing documents, not by statute, and loss-assessment coverage on the owner's policy is the usual backstop for an owner's share of a common loss.

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

The Act contains no UCA-style deductible-allocation rule; who bears the master-policy deductible is determined by the declaration for both condominiums and planned communities.¹ On proceeds and rebuilding, the Act speaks only through its casualty provision: under § 70-23-803, if the association fails to decide within 60 days after damage to repair, reconstruct, or rebuild, the property is removed from the Act and wound down through Part 8; otherwise, application of proceeds follows the master deed.⁷ An owner's exposure for uninsured amounts arises chiefly through common-expense assessments, which the association may enforce by a lien for unpaid common expenses that is prior to other liens except tax and assessment liens and a recorded first mortgage or trust indenture (§ 70-23-607).⁹ For planned communities, deductible and proceeds handling are entirely contractual under the CC&Rs.

D. Fidelity, D&O, and disclosure

Fidelity and D&O coverage are declaration-driven or lender-driven, not statutory, for both condominiums and planned communities; the Nonprofit Corporation Act permits D&O insurance and indemnification but requires neither (§ 35-2-453; § 35-2-447).⁵⁶ On disclosure, the Act imposes a limited obligation: under § 70-23-613, when a seller constitutes a majority of the unit owners — the developer or bulk-owner context — the seller must furnish the buyer a copy of the Unit Ownership Act, the bylaws, and administrative rules before a buy-sell agreement, which can carry insurance-related documents.¹³ Montana has no general statutory resale-certificate regime for condominiums or planned communities, so any broader obligation to deliver the master policy or a certificate of insurance to owners, purchasers, or lenders is contractual — or driven by a lender's closing requirements — rather than statutory.

Section 4: Recent legislative and judicial activity

A. Recent bills

Montana's legislature meets in biennial regular sessions; the 2025 (69th) regular session is the only regular session within the past 24 months. No 2025 bill amended the insurance provisions of the Unit Ownership Act. Two enacted property-insurance bills bear on association coverage indirectly by shaping the wildfire-driven market that Montana condominiums and planned communities operate in.

B. Recent appellate rulings

No Montana Supreme Court decision within the past 36 months squarely addresses a community association's insurance obligations, master-versus-unit coverage allocation, deductible allocation, or the application of insurance proceeds after a casualty in a common-interest community. The nearest recent insurance decision involving a condominium project is TCF Enterprises, Inc. v. Rames, Inc.

C. Active legislative debates

The active pressure on association insurance in Montana is market-driven rather than statutory: a legislative study of the causes of rising property-insurance rates (House Joint Resolution 61, 2025) is underway, and the Commissioner of Securities and Insurance has issued advisories on wildfire-related nonrenewals, but no proposal to modernize the Unit Ownership Act's insurance treatment or to enact a comprehensive planned-community insurance statute is pending.¹²

Section 5: National positioning and related coverage

Montana falls into the third of three broad categories of association insurance regulation. The first is condominium-statute states on the UCA or UCIOA model, which impose a detailed statutory condominium insurance mandate keyed to Section 3-113 — replacement-cost valuation, a liability mandate, and a deductible/proceeds scheme. The second is comprehensive non-uniform prescriptive states, notably Florida (Chapter 718, with structural-inspection and reserve requirements) and California (the Davis-Stirling Act). The third is CC&R-primary and traditional-statute states such as Alabama, Arkansas, and Mississippi, where planned communities carry no statutory insurance mandate and condominiums fall under a traditional horizontal property act thin on insurance. Montana sits at the lighter-touch end of this third group: a 1965 unit ownership statute rather than a modern uniform act, no planned-community statute imposing insurance, no intermediate appellate court — civil disputes run from the District Courts directly to the Montana Supreme Court — and a wildfire-driven insurance market. For a multi-state operator entering Montana, the practical takeaway is that condominium coverage is driven by the master deed and lender requirements far more than by the statute, planned-community coverage is entirely declaration-driven, and wildfire availability and cost are the binding real-world constraint. Montana hasn't moved to modernize its unit ownership statute or to enact a comprehensive planned-community insurance statute; recent activity has centered on the property-insurance market rather than on association-specific mandates.

HOA Weekly updates its Montana Insurance Requirements coverage quarterly as the legislature and the Montana Supreme Court act and as the property-insurance market shifts. Federal frameworks — Fannie Mae, Freddie Mac, FHA, NFIP, and FHA fair-housing accommodation rules — also apply to Montana associations regardless of the state framework, with fuller treatment to follow once that coverage is built out.

1. Mont. Code § 70-23-612, Insurance of building — premiums as common expenses (Montana Code Annotated, Montana Legislature) ↩
2. Montana has no omnibus HOA act; planned communities operate under recorded declarations and Title 35, Chapter 2 ↩
3. Mont. Code § 70-23-103, Applicability — submission by declaration required, and § 70-23-102, Definitions (2024 Montana Code Annotated) ↩
4. Fannie Mae Selling Guide B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments (lender requirement, not Montana statute) ↩
5. Mont. Code § 35-2-447, Authority to indemnify (Montana Nonprofit Corporation Act, Montana Legislature) ↩
6. Mont. Code § 35-2-453, Insurance (a corporation "may" purchase and maintain D&O insurance) (Montana Nonprofit Corporation Act, Montana Legislature) ↩
7. Mont. Code § 70-23-803, Damage to property — decision not to repair or rebuild — removal from chapter (Montana Code Annotated, Montana Legislature) ↩
8. Mont. Code § 70-23-102(4), Definitions (common expenses include expenses declared common by § 70-23-612) (Montana Code Annotated, Montana Legislature) ↩
9. Mont. Code § 70-23-607, Claim for common expenses — priority of lien — contents — recording (Montana Code Annotated, Montana Legislature) ↩
10. NFIP Residential Condominium Building Association Policy (RCBAP); building coverage limited to the lesser of 100% replacement cost value or units × $250,000, subject to 80% coinsurance ↩
11. Fannie Mae Selling Guide B7-3-03, Master Property Insurance Requirements for Project Developments (100% replacement cost, 5% maximum deductible; aligned with Freddie Mac Seller/Servicer Guide § 4703.2 effective Feb. 7, 2024) ↩
12. Montana Commissioner of Securities and Insurance, "Protecting your home amid rising insurance costs and wildfire risks" (May 24, 2025), noting HB 136, HB 533, and HJ 61 ↩
13. Mont. Code § 70-23-613, Disclosure by seller — seller to furnish documents — delay period (2025 Montana Code Annotated) ↩
14. 2025 Montana House Bill 136 (Ch. 105, Laws of 2025), enrolled text, codified at Mont. Code § 33-24-110; signed by Governor Apr. 7, 2025 ↩
15. 2025 Montana House Bill 533 (Ch. 485, Laws of 2025), enrolled text, codified at Mont. Code § 33-16-117; signed by Governor May 8, 2025 (Montana Legislature) ↩
16. TCF Enterprises, Inc. v. Rames, Inc., 2024 MT 38, 415 Mont. 306, 544 P.3d 206 (Montana Supreme Court, Feb. 27, 2024) ↩