South Carolina HOA Insurance Requirements

Section 1: Overview — How HOA insurance is regulated in South Carolina

South Carolina regulates condominium insurance through a traditional horizontal property statute that says little about insurance, and it imposes no statutory insurance mandate at all on non-condominium planned communities, which are governed entirely by their recorded declarations. Condominiums (horizontal property regimes) are governed by the South Carolina Horizontal Property Act, S.C. Code § 27-31-10 et seq., a statute derived from the 1962 state code rather than the 1980 Uniform Condominium Act or the 1982 Uniform Common Interest Ownership Act.¹ The Act's insurance provision is a single sentence directing the association to insure the property against risks, so the recorded master deed and the bylaws carry the operational detail for any given condominium.¹ Planned-community homeowners associations have no dedicated statute and no statutory insurance requirement; their coverage obligations come from the CC&Rs, with corporate scaffolding from the South Carolina Nonprofit Corporation Act of 1994, S.C. Code § 33-31-101 et seq.⁴ Fidelity (crime) coverage and directors-and-officers (D&O) coverage aren't statutory mandates in South Carolina and are typically driven by the declaration or by lender requirements. Because the statute provides so little, for financed condominiums the Fannie Mae, Freddie Mac, FHA, and National Flood Insurance Program requirements often set the effective coverage floor.⁷ Nationally, South Carolina sits at the lighter-touch statutory end, distinct from UCA and UCIOA condominium-mandate states and from prescriptive states such as Florida, even though its coast carries some of the most acute hurricane insurance conditions on the Atlantic seaboard. The sections below detail the statutory framework, the coverage allocation, and the recent activity that shapes real coverage decisions.

Section 2: The statutory insurance framework

2A. The South Carolina Horizontal Property Act and its insurance treatment

Condominiums in South Carolina are created and governed under the South Carolina Horizontal Property Act, S.C. Code § 27-31-10 et seq., which applies once a master deed submitting the property to a horizontal property regime is recorded.¹ The Act's insurance provision is S.C. Code § 27-31-240, titled "Insurance," and it reads in full: "The council of co-owners shall insure the property against risks, without prejudice to the right of each co-owner to insure his apartment on his own account and for his own benefit."¹ This is a traditional horizontal property statute traceable to the 1962 state code, not a descendant of the 1980 Uniform Condominium Act or the 1982 Uniform Common Interest Ownership Act. South Carolina practitioners describe the provision itself as "relatively vague."⁹

That distinction is the defining feature of the page. The Act imposes a duty to insure "the property," which the statute defines broadly to include the land, the building, all improvements and structures, and appurtenant rights (§ 27-31-20).² But it stops there. The Act doesn't specify a valuation basis, doesn't require full insurable replacement cost, doesn't mandate a commercial general liability policy, contains no "reasonably available" qualifier, no improvements-and-betterments exclusion, and no modern deductible-allocation scheme. Those are all features of UCA Section 3-113, and they're absent here. Any statement that South Carolina condominium statute requires replacement-cost valuation, liability coverage, or a structured deductible allocation would be importing machinery the Act doesn't contain.

What the Act does address is what happens after a casualty. Section 27-31-250, rewritten by a 2006 amendment, requires damaged or destroyed property to be repaired or replaced promptly by the council of co-owners unless repair is illegal or 80% of the co-owners vote not to rebuild, and it provides that the cost of repair in excess of insurance proceeds and reserves is a common expense.⁵ Section 27-31-260 addresses the situation where the property is uninsured or the indemnity is insufficient, allocating rebuilding costs among affected co-owners in proportion to the value of their apartments or as the bylaws provide.⁶ Because the coverage-purchasing rule itself is a single sentence, the master deed and the bylaws — which § 27-31-150 and § 27-31-160 require and govern — do the operational work of defining what the association insures, on what valuation basis, and how deductibles are handled.¹⁰

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

Non-condominium planned-community homeowners associations in South Carolina have no dedicated common-interest statute and therefore no statutory insurance mandate. Their insurance obligations are set entirely by the recorded declaration (the CC&Rs). South Carolina's Homeowners Association Act, S.C. Code § 27-30-110 et seq., enacted in 2018, addresses disclosure, document recording, and budget-increase notice, and it doesn't impose an association insurance scheme.¹¹ It doesn't fill the gap.

The order of precedence differs by community type. For a condominium, the analysis runs from the Act — to the limited extent § 27-31-240 speaks to insurance — then the master deed or declaration, then the bylaws, then the rules. For a planned community, the declaration is the primary and effectively sole source, with no overriding insurance statute above it. Where the association is incorporated, the South Carolina Nonprofit Corporation Act of 1994, S.C. Code § 33-31-101 et seq., supplies corporate-formality scaffolding, including indemnification of directors and officers and, under § 33-31-857, the authority — not the obligation — to purchase insurance on their behalf.⁴ That's a corporate governance provision, not an insurance mandate. The practical implication is direct: for a planned community, the coverage analysis begins and ends with the declaration and any lender requirements.

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 South Carolina for either condominiums or planned communities. They're driven by the declaration or by lender requirements. The recurring error is treating the Fannie Mae fidelity guideline as if it were state law; it's a secondary-market lending condition, not a South Carolina statute.

The federal and secondary-market overlay is a distinct layer. Per Fannie Mae Selling Guide B7-4-02, fidelity/crime insurance is required for all condo and co-op projects except those qualifying for a Waiver of Project Review, those under Limited Review, "condo or co-op projects consisting of 20 units or less, or condo or co-op projects that would need fidelity/crime insurance coverage of $5,000 or less."³ Fannie Mae's master property requirements have called for coverage equal to the full replacement cost value of the project improvements, with a maximum deductible historically capped at 5% of the policy's face amount (Selling Guide B7-3-03).⁷ On March 18, 2026 the Federal Housing Finance Agency announced, implemented through Fannie Mae Lender Letter LL-2026-03, that Fannie Mae and Freddie Mac would accept actual cash value roof coverage on single-family homes and condos, simplify the maximum per-unit deductible rule, and raise condo replacement-reserve funding from 10% to 15% of annual budgeted income; FHFA Director William J. Pulte said the agencies were "replacing a disruptive and expensive Biden insurance mandate with commonsense policies for today's market."⁸ FHA condominium project approval conditions and NFIP flood requirements in Special Flood Hazard Areas sit alongside these. Because the Horizontal Property Act provides so little, this lender layer frequently sets the binding coverage floor for financed South Carolina condominiums, driving decisions on master property adequacy, fidelity coverage, and flood coverage. It applies to planned communities as well, which have no statutory floor at all.

South Carolina's market context shapes real coverage decisions more than the statute does. The coast — Charleston, Myrtle Beach, Hilton Head, and the barrier islands — carries severe hurricane and windstorm exposure, and coastal association policies routinely carry named-storm and hurricane percentage deductibles, commonly 1% to 5% of insured value. Coastal associations frequently rely on the South Carolina Wind and Hail Underwriting Association, the state's coastal residual-market wind insurer created by the General Assembly in 1971, for wind coverage, paired with separate policies for other perils.¹² Storm surge and flooding bring the NFIP into play, and inland exposure includes tornadoes and hail. The wind pool is a residual-market mechanism and the NFIP is a federal program; neither is a statutory HOA mandate.

Section 3: Coverage allocation and compliance obligations

A. Association coverage obligations

For condominiums, the South Carolina Horizontal Property Act requires the council of co-owners to insure the property against risks (§ 27-31-240), but it doesn't define the perils, the valuation basis, or the coverage limits; the master deed and bylaws supply those terms — condominiums, statutory duty plus contractual detail.¹ In practice, associations carry a master property policy on the common elements and building and a commercial general liability policy, but the liability policy is a contractual and lender-driven choice, not a statutory requirement. For planned communities, all association coverage obligations are contractual through the declaration, with no statutory floor — planned communities, contractual only.

B. Coverage allocation between association and owners

The master policy's scope is set by the master deed, which typically follows a "bare walls-in," "single entity," or "all-in" structure; the most common reader error is assuming the master policy covers the unit interior and owner improvements when the governing documents may not — condominiums, contractual via master deed. Individual owners typically carry an HO-6 unit policy covering personal property, interior finishes, personal liability, and loss assessments, which fills the gaps the master policy leaves — condominiums and, where required by the declaration, planned-community owners. The Act expressly preserves each co-owner's right to insure the unit separately (§ 27-31-240).¹

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

The Act contains no UCA-style deductible-allocation rule; who bears the master-policy deductible is set by the declaration, and § 27-31-250(B) provides that repair or replacement cost above insurance proceeds and reserves is a common expense — condominiums, statutory plus contractual.⁵ Insurance proceeds must be applied to prompt repair or replacement unless 80% of co-owners vote not to rebuild, in which case proceeds are distributed per § 27-31-250(C). Where the property is uninsured or underinsured, § 27-31-260 allocates rebuilding costs among affected co-owners.⁶ Coastal hurricane percentage deductibles and wind-pool placements shape real wind coverage, and a percentage deductible can shift a large share of a windstorm loss onto owners through common-expense assessment and loss-assessment coverage — condominiums; parallel contractual mechanics in planned communities.

D. Fidelity, D&O, and disclosure

Fidelity and D&O coverage are declaration-driven or lender-driven, not statutory; the Nonprofit Corporation Act permits, but doesn't require, D&O insurance (§ 33-31-857) — both community types.⁴ On disclosure, the Homeowners Association Act requires governing documents to be recorded to be enforceable and requires associations to provide financial and governing documents to members on request (§ 27-30-110 et seq.), and the residential property condition disclosure form must state whether a property is subject to an HOA — both community types, statutory.¹¹

Section 4: Recent legislative and judicial activity

A. Recent bills

B. Recent appellate rulings

No South Carolina Court of Appeals or South Carolina Supreme Court opinion decided between July 2023 and July 2026 squarely resolves an association insurance-obligation, coverage-allocation, deductible, or proceeds question under the Horizontal Property Act. Condominium-related appellate decisions in this window turn on other issues: Wedgewood Condominium Association v. Centex Homes (Op. No. 6124, filed September 24, 2025) is a construction-defect verdict,¹⁴ and Royal Garden Resort Regime Homeowners Association v. Sea Breeze Property Management (2024-UP-140, filed May 1, 2024) is an easement-access dispute.¹⁵ The most frequently cited administrative authority on deductible allocation remains a South Carolina Attorney General opinion of January 18, 2017, requested by Representative Wm. Weston Newton, "regarding the allocation of insurance deductibles and expenses associated with hurricane damage to horizontal property regimes/associations"; an Attorney General opinion is advisory and not binding on courts.¹⁶

C. Active legislative debates

The most material pressure on South Carolina association coverage is market-driven rather than statutory: coastal hurricane cost and availability, wind-pool depopulation, and reinsurance-driven rate movement, with active legislative attention through H. 4817 and the Department of Insurance's annual coastal market reporting.¹² No pending bill would add an association insurance mandate to the Horizontal Property Act or to the Homeowners Association Act.

Section 5: National positioning and related coverage

South Carolina falls into the lighter-touch category of association insurance regulation. It isn't a UCA or UCIOA state with a detailed statutory condominium insurance mandate keyed to Section 3-113, and it isn't a comprehensive prescriptive state like Florida (Chapter 718, with structural-inspection and reserve requirements) or California (Davis-Stirling). It belongs with CC&R-primary and traditional-statute states such as Alabama and Arkansas, where planned communities carry no statutory insurance mandate and condominiums are governed by a traditional horizontal property act that is thin on insurance, even as its coast carries some of the most acute hurricane insurance conditions on the Atlantic seaboard. For a multi-state operator entering South Carolina, the practical takeaway is that condominium coverage is driven by the master deed and lender requirements more than by the statute, planned-community coverage is entirely declaration-driven, and coastal hurricane and wind-pool availability is a South Carolina-specific constraint. South Carolina hasn't moved to modernize its horizontal property act or to add an insurance provision to its disclosure-oriented Homeowners Association Act.

HOA Weekly's South Carolina Insurance Requirements coverage updates quarterly as the General Assembly and the South Carolina 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 South Carolina associations regardless of the state framework, with fuller treatment to follow once that coverage is built out.

1. S.C. Code § 27-31-10 et seq., Horizontal Property Act (see § 27-31-240, Insurance), South Carolina Code of Laws, Title 27, Chapter 31 ↩
2. S.C. Code § 27-31-20, Definitions (definition of "property"), South Carolina Code of Laws, Title 27, Chapter 31 ↩
3. Fannie Mae Selling Guide B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments ↩
4. S.C. Code § 33-31-857, Insurance (South Carolina Nonprofit Corporation Act of 1994), South Carolina Code of Laws, Title 33, Chapter 31 ↩
5. S.C. Code § 27-31-250, Repair or reconstruction; vote of co-owners; application of insurance proceeds, South Carolina Code of Laws, Title 27, Chapter 31 ↩
6. S.C. Code § 27-31-260, Sharing expenses in case of fire or other disaster, South Carolina Code of Laws, Title 27, Chapter 31 ↩
7. Fannie Mae Selling Guide B7-3-03, Master Property Insurance Requirements for Project Developments ↩
8. FHFA news release, March 18, 2026, "Fannie Mae and Freddie Mac Remove Certain Homeowners Insurance Requirements That Will Reduce Costs" ↩
9. McCabe, Trotter & Beverly, P.C., "Condominium Insurance in SC: What's Required? When to File?" ↩
10. S.C. Code §§ 27-31-150 and 27-31-160, Administration of property; provisions required in bylaws, South Carolina Code of Laws, Title 27, Chapter 31 ↩
11. S.C. Code § 27-30-110 et seq., South Carolina Homeowners Association Act (2018 Act No. 245), South Carolina Code of Laws, Title 27, Chapter 30 ↩
12. South Carolina Department of Insurance, Wind Pool (South Carolina Wind and Hail Underwriting Association) information and coastal property insurance market reporting ↩
13. S.C. H. 4817 (126th Session, 2025-2026), Insurance Rate Reduction and Policyholder Protection Act, bill history ↩
14. Wedgewood Condominium Association v. Centex Homes, Op. No. 6124 (S.C. Ct. App., filed Sept. 24, 2025) ↩
15. Royal Garden Resort Regime Homeowners Association, Inc. v. Sea Breeze Property Management & Contract Services, Inc., 2024-UP-140 (S.C. Ct. App., filed May 1, 2024) ↩
16. South Carolina Attorney General opinion, January 18, 2017, on the interpretation of the Horizontal Property Act regarding allocation of insurance deductibles and hurricane-damage expenses ↩