Tennessee HOA Insurance Requirements

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

Tennessee imposes a statutory association insurance mandate on condominiums through the Tennessee Condominium Act of 2008, but non-condominium planned communities have no dedicated statutory insurance mandate and rely on the recorded declaration.¹² The condominium insurance section is Tenn. Code Ann. § 66-27-413, which requires the association to maintain property insurance on the common elements and liability insurance, subject to the qualifier that the coverage be reasonably available.¹

Non-condominium planned-community associations are a different matter. Tennessee has no statute that imposes an insurance obligation on them; their coverage is governed entirely by the recorded declaration, with corporate-formality scaffolding supplied by the Tennessee Nonprofit Corporation Act (Tenn. Code Ann. § 48-51-101 et seq.) where the association is incorporated.²⁷ The condominium mandate descends from the Section 3-113 insurance model of the Uniform Condominium Act, and the "reasonably available" qualifier survives in the Tennessee text, along with a duty to notify owners if required coverage becomes unavailable.¹

Fidelity (crime) coverage and directors-and-officers (D&O) liability coverage aren't statutory mandates in Tennessee; they're typically driven by the declaration or by secondary-market lender requirements.⁶⁵ Within the national picture, Tennessee is a modern-uniform condominium-mandate state whose planned-community insurance resembles the CC&R-primary states.¹⁰ The sections that follow set out the statutory framework, the coverage allocation, and the recent legislative and judicial record.

Section 2: The statutory insurance framework

2A. The condominium insurance mandate

The condominium insurance obligation is codified at Tenn. Code Ann. § 66-27-413, titled "Insurance," enacted as part of the Tennessee Condominium Act of 2008.¹ The insurance section is § 66-27-413, distinct from § 66-27-313, which governs "Subdivision of units."¹¹ The section descends from the Section 3-113 insurance model shared by the Uniform Condominium Act and the later UCIOA, but the Tennessee-specific language controls, and one notable feature of the modern UCIOA text, express authority to charge a deductible to an owner who is the source of a loss, wasn't adopted.¹

The section requires two coverages, each conditioned on being reasonably available. First, commencing no later than the first conveyance of a unit to someone other than the declarant, the association must maintain property insurance on the common elements against risks of direct physical loss commonly insured against for similar properties. The total amount, after application of any deductibles, must be no less than 80% of the total replacement cost of the insured property at purchase and at each renewal, exclusive of land, excavations, foundations, and other items normally excluded from property policies.¹ Second, the association must maintain liability insurance, including medical payments insurance, in an amount the board determines but not less than any amount the declaration specifies, covering occurrences arising out of the use, ownership, or maintenance of the common elements.¹

The "reasonably available" qualifier is real and operative. If the required property and liability coverage isn't reasonably available, the association must promptly notify all unit owners, by hand delivery or prepaid United States mail. The declaration may require the association to carry other insurance, and the association may carry any other insurance it deems appropriate.¹

For a building whose units have horizontal boundaries described in the declaration — a stacked or multi-story condominium — the property insurance must also include the units, but need not include improvements and betterments installed by unit owners.¹ This is the improvements-and-betterments exclusion, and it marks the boundary between what the master policy covers and what the owner must insure. The policy must treat each unit owner as an insured person for common-element liability, must waive subrogation against unit owners absent intentional loss, and must be primary where an owner separately insures the same risk.¹

Insurance proceeds for a covered property loss are payable to an insurance trustee, or otherwise to the association, and are held in trust for owners and lienholders. Proceeds must be disbursed first for repair or restoration. Any damaged or destroyed portion for which insurance is required must be repaired or replaced promptly by the association unless the condominium is terminated, repair would be illegal, or 80% of the affected owners vote not to rebuild. The cost of repair or replacement in excess of insurance proceeds and reserves is a common expense.¹

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

Non-condominium planned-community associations in Tennessee operate without a dedicated statute and without any statutory insurance mandate. There's no counterpart to § 66-27-413 for single-family or townhome HOAs organized outside the condominium form; their insurance obligations begin and end with the recorded declaration. Tennessee law doesn't require these associations to carry property or liability insurance at all, which makes the declaration the operative rulebook.²¹⁰

The order of precedence differs by community type. For a condominium, the analysis runs from the Tennessee Condominium Act — to the extent it speaks to insurance — then the declaration, then the bylaws, then the rules. For a planned community, the declaration is the primary source, with no overriding insurance statute sitting above it. Where the association is incorporated, the Tennessee Nonprofit Corporation Act supplies corporate-formality context, including standards of director conduct and indemnification authority, but it doesn't impose an insurance requirement.⁷

The practical implication is direct. For a planned community, a manager or board can't determine coverage obligations from any statute; the coverage analysis begins with the recorded declaration and any applicable lender requirements, and nowhere else.

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

Even for condominiums, the declaration remains operationally central. Section 66-27-413 lets the declaration require additional coverage, and many communities do. For planned communities, the declaration is the only source. In either case, the recorded instrument read against the statutory backstop that applies to the community type is the working rulebook.¹

Fidelity (crime) insurance and D&O liability insurance aren't statutory mandates in Tennessee. The Condominium Act lists, among the permissive powers of a unit owners' association, the power to provide for indemnification of officers and directors and to maintain D&O liability insurance; this is a power, not a command.⁶ The Tennessee Nonprofit Corporation Act likewise permits a corporation to purchase and maintain D&O insurance but doesn't require it.⁷ A common error is to import the Fannie Mae fidelity guideline and present it as Tennessee law; Fannie Mae requires fidelity/crime coverage at least equal to three months of total assessments on all units plus the association's reserve funds, and only for projects that collect more than $5,000 per month in assessments or consist of more than 20 units. That's a lender guideline, not a statute.⁵

The federal and secondary-market overlay applies regardless of state law, and it frequently exceeds any state-law floor. Fannie Mae and Freddie Mac project standards, FHA condominium project approval conditions, and National Flood Insurance Program requirements reach Tennessee associations, including planned communities that have no statutory floor, whenever units are financed conventionally or through FHA.⁵⁸¹² In practice, these overlays drive fidelity, flood, and property coverage decisions. They are addressed as a distinct layer in Section 3 and are never Tennessee statute.

Tennessee's insurance market shapes the real coverage decisions. The dominant exposures are severe convective storms, tornadoes, wind, and hail statewide, plus riverine and flash flooding, as the May 2010 Nashville flood demonstrated for inland areas far from any coast.¹³ Wind-and-hail and roof-specific deductibles are common, and units in Special Flood Hazard Areas bring the NFIP into play. Tornado frequency has risen sharply: Tennessee recorded 60 confirmed tornadoes in 2025, up from six in 2022.⁹ Tennessee has no coastal windstorm exposure. These are market realities that affect availability and cost, not statutory HOA mandates.

Section 3: Coverage allocation and compliance obligations

A. Association coverage obligations

For condominiums, the master policy must carry property insurance on the common elements at no less than 80% of replacement cost after deductibles, and liability insurance including medical payments in a board-determined amount not below any declaration figure; both are mandatory but conditioned on reasonable availability, and both may be supplemented by the declaration.¹ For planned communities, there's no statutory floor; whatever the association must carry is set by the declaration as a contractual obligation, not by statute.²

B. Coverage allocation between association and owners

In a condominium with horizontal boundaries, the master policy reaches the common elements and the units but not owner-installed improvements and betterments, which are the owner's responsibility along with personal property and interior finishes the declaration assigns to the unit.¹ This allocation is mandatory in its baseline but can be broadened by the declaration. The individual owner unit policy — commonly an HO-6 — is where interior, betterments, personal property, and loss-assessment coverage sit; the statute expressly preserves the owner's right to insure for the owner's own benefit, and the association policy is primary where both cover the same risk.¹ In planned communities, the split between association-insured and owner-insured property is contractual and comes entirely from the declaration.²

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

By default the deductible reduces the insured amount the association carries under § 66-27-413(a), and the statute contains no provision allowing the association to charge the deductible back to an owner who caused the loss; any such allocation must come from the declaration.¹ Proceeds are held by an insurance trustee or the association and applied first to repair or restoration, and the association must repair or replace promptly except in the narrow statutory exceptions. Costs above proceeds and reserves become a common expense, which is the mechanism by which owners face loss-assessment exposure for uninsured amounts.¹ These proceeds and repair rules are condominium-specific; in planned communities the equivalent rules are whatever the declaration provides.

D. Fidelity, D&O, and disclosure

Fidelity and D&O coverage are declaration-driven or lender-driven for both community types, not statutory.⁶⁵ For condominiums, the resale disclosure package a purchaser or lender may request includes a statement of the association's insurance coverage, which may take the form of a certificate showing types, limits, and deductibles; this is a statutory disclosure obligation specific to condominiums.¹⁴ Separately, the condominium insurer must issue certificates or memoranda of insurance to the association and, on written request, to any unit owner, mortgagee, or deed-of-trust beneficiary, which is how owners, buyers, and lenders verify the master coverage.¹ Planned communities have no comparable statutory disclosure duty; certificate access there is contractual.

Section 4: Recent legislative and judicial activity

A. Recent bills

One condominium-related measure from the past 24 months touches Title 66 but doesn't amend the insurance section. No bill in the current window amends Tenn. Code Ann. § 66-27-413 or otherwise changes association property, liability, fidelity, or flood insurance obligations.

B. Recent appellate rulings

No Tennessee Court of Appeals or Tennessee Supreme Court opinion decided in the past 36 months addresses a condominium or planned-community association's insurance obligations, coverage allocation, insurance-proceeds distribution, the repair-or-replace duty, or a deductible dispute under § 66-27-413 or a governing declaration. The condominium appellate matters that appear in the window concern unpaid assessments and restrictive covenants rather than insurance. Civil insurance disputes in Tennessee proceed through the trial courts, which are bifurcated between Chancery Courts (equity, where many association and declaration disputes are heard) and Circuit Courts (law), with appeal to the Tennessee Court of Appeals and discretionary review by the Tennessee Supreme Court.

C. Active legislative debates

There's no active Tennessee proposal that would create an insurance mandate for planned communities or amend the condominium insurance section; recurring "Tennessee Homeowners Association Act" proposals have failed and, by their terms, wouldn't have applied to Condominium-Act condominiums. The most material recent pressure on Tennessee association insurance is market-driven, reflecting rising tornado, hail, and flood cost and constrained availability, rather than statutory change.⁹

Section 5: National positioning and related coverage

Tennessee sits in the first of three broad categories of association insurance regulation. The first is condominium-statute states on the UCA or UCIOA model that impose a statutory condominium insurance mandate keyed to Section 3-113, with Tennessee on a modern uniform version enacted in 2008.¹ The second is prescriptive non-uniform states, notably Florida (Chapter 718) and California (Davis-Stirling), which legislate insurance in far greater detail.¹⁶ The third is CC&R-primary states such as Alabama and Arkansas, where the declaration governs.¹⁰ On the planned-community question, Tennessee resembles the CC&R-primary states, and older condominiums may remain under the predecessor Horizontal Property Act, which treats insurance differently.⁴ For a multi-state operator entering Tennessee, condominium obligations track the Section 3-113 model as adopted in 2008, pre-2009 condominiums may fall under the Horizontal Property Act, planned-community coverage is declaration-driven, and tornado-and-flood availability is a Tennessee-specific market factor. Tennessee hasn't amended the Condominium Act's insurance provisions since their 2008 enactment.¹

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

1. Tenn. Code Ann. § 66-27-413 (Insurance), Tennessee Condominium Act of 2008 ↩
2. Tennessee HOA law summary confirming no state statute requires property or liability insurance for single-family/planned-community associations ↩
3. Tenn. Code Ann. § 66-27-202 (Applicability; Condominium Act applies to condominiums created after January 1, 2009) ↩
4. Tenn. Code Ann. §§ 66-27-101 et seq. (Tennessee Horizontal Property Act, governing condominiums created before January 1, 2009) ↩
5. Fannie Mae Selling Guide B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments ↩
6. Tenn. Code Ann. § 66-27-402(a)(14) (permissive power of a unit owners' association to provide for indemnification and maintain D&O liability insurance) ↩
7. Tenn. Code Ann. § 48-58-508 (Tennessee Nonprofit Corporation Act; a corporation "may purchase and maintain insurance" for directors and officers) ↩
8. Fannie Mae Selling Guide B7-3-06, Flood Insurance Requirements for All Property Types ↩
9. MoneyGeek, "Tornado Alley Has Moved," reporting Tennessee recorded 60 confirmed tornadoes in 2025 versus six in 2022 ↩
10. Tennessee Advisory Commission on Intergovernmental Relations (TACIR), report on HOA law ↩
11. Tenn. Code Ann. § 66-27-313 (Subdivision of units) ↩
12. HUD, FHA Condominium Project Approval Required Documentation ↩
13. Tennessee home insurance market guide describing tornado, flood, and severe-storm exposure ↩
14. Tenn. Code Ann. § 66-27-503(9) (resale disclosure package includes a statement of the association's insurance coverage) ↩
15. SB1079 / HB871, Public Chapter 180 (2025), Fiscal Memorandum, Tennessee General Assembly ↩
16. Fla. Stat. § 718.111(11) (Florida's prescriptive condominium insurance statute, for national comparison) ↩