Texas HOA Insurance Requirements

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

Texas imposes a statutory association insurance mandate on condominiums through the Texas Uniform Condominium Act (Property Code Chapter 82), but the Texas Residential Property Owners Protection Act (Chapter 209), which governs planned-community property owners' associations, imposes no comparable insurance scheme, so planned-community coverage is declaration-driven. The condominium mandate sits in Tex. Prop. Code § 82.111, which by its own terms applies to every condominium in the state, including those created before January 1, 1994 under the older Texas Condominium Act (Chapter 81).¹² Chapter 209 addresses management certificates, records, assessments, collections, foreclosure, elections, and owner-protective matters, but contains no property, liability, or proceeds insurance provision; planned-community insurance is set by the recorded declaration, with corporate scaffolding from the Texas Business Organizations Code where the association is incorporated as a nonprofit.³ The condominium provision descends from the Section 3-113 insurance model shared by the Uniform Condominium Act and UCIOA, and it conditions the property and liability mandate on coverage being available "to the extent reasonably available," with a duty to notify owners and lienholders if required coverage becomes unavailable.¹³ Fidelity (crime) coverage and directors-and-officers (D&O) liability coverage aren't statutory mandates; they're driven by the declaration or by secondary-market lender requirements. Within the national picture, Texas is a UCIOA-based condominium-mandate state whose planned-community insurance, despite the existence of Chapter 209, resembles the CC&R-primary posture of states with no HOA insurance statute, all set against one of the most catastrophe-exposed property-insurance markets in the country. The sections below detail the condominium mandate, the planned-community gap, the declaration and federal overlays, coverage allocation, and recent activity.

Section 2: The statutory insurance framework

2A. The condominium insurance mandate

The condominium insurance mandate is codified at Tex. Prop. Code § 82.111, verified against the current Property Code on the Texas Legislature's site.¹ The section descends from the Section 3-113 insurance model shared by the Uniform Condominium Act and UCIOA, but the operative language is the Texas text, and one Texas-specific point matters: the deductible-allocation subsections were added by the 83rd Legislature in 2013 through H.B. 2075, not by the 2008-era uniform amendments.² Beginning no later than the first conveyance of a unit to a person other than a declarant, the association must maintain, to the extent reasonably available, two coverages. First, property insurance on the insurable common elements against all risks of direct physical loss commonly insured against, including fire and extended coverage, in a total amount of at least 80 percent of the replacement cost or actual cash value of the insured property as of the effective date and at each renewal date.⁴ Second, commercial general liability insurance, including medical payments insurance, in an amount determined by the board but not less than any amount specified by the declaration, covering occurrences arising out of the use, ownership, or maintenance of the common elements.⁶

The mandate isn't absolute. Both coverages are qualified by the phrase "to the extent reasonably available," and if the required insurance isn't reasonably available, the association must deliver or mail notice of that fact to all unit owners and lienholders.¹³ Coverage scope depends on building geometry: where a building contains units with horizontal boundaries described in the declaration (stacked units), the property insurance must also include the units, but it need not include improvements and betterments installed by unit owners.⁵ The statute doesn't set a dollar minimum for property or liability coverage; the property standard is replacement-cost-based at the 80 percent floor.

On proceeds and rebuilding, the insurance trustee or the association holds proceeds in trust for unit owners and lienholders as their interests appear, and proceeds are disbursed first for repair or restoration of the damaged common elements and units.¹⁰ Any portion of the condominium for which insurance is required that is damaged must be promptly repaired or replaced by the association unless the condominium is terminated or repair would be illegal, and the cost of repair in excess of proceeds is a common expense that the board may fund by assessment.¹⁰ On deductibles, the policy may carry commercially reasonable deductibles set by the board. Where a covered repair costs less than the deductible, the party who would be responsible for the repair absent insurance pays; where the cost exceeds the deductible, the dedicatory instruments determine who pays the deductible, and if they're silent the board decides by resolution, failing which the cost is a common expense.⁹ Critically, if damage is due wholly or partly to an act or omission of a unit owner or the owner's guest or invitee, the association may assess the deductible and any expense exceeding proceeds against that owner and the owner's unit.¹⁴

2B. The planned-community statute and the insurance-mandate gap

Planned communities in Texas are governed by the Texas Residential Property Owners Protection Act, Tex. Prop. Code Chapter 209, which regulates property owners' associations comprehensively on management certificates, records, assessment collection, foreclosure, elections, architectural control, and owner-protective procedures. It doesn't impose an association property, liability, and proceeds insurance scheme; a review of the chapter's sections shows no comprehensive insurance provision comparable to § 82.111.³ For a planned community, association insurance is set by the recorded declaration, and there's no statutory property, liability, or proceeds backstop to fall back on. This is the defining trap of Texas insurance analysis. Because Texas has a comprehensive planned-community statute, a reader may assume it parallels the condominium statute on insurance. It doesn't. On the insurance question specifically, a Texas planned community resembles a community in a CC&R-primary state with no HOA insurance statute at all. The practical implication is direct: for a planned community, the coverage analysis begins and ends with the declaration and any applicable lender requirements, not with Chapter 209.

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

For condominiums, § 82.111 supplies defaults but leaves substantial room for the declaration: the declaration may require the association to carry additional insurance, controls the allocation of the deductible where the cost exceeds it, and may vary or waive the section's provisions only where all units are restricted to nonresidential use.² For planned communities, the declaration is the primary source with no overriding insurance statute. Fidelity (crime) insurance and D&O liability insurance aren't statutory mandates in either context; in Texas they're declaration-driven or lender-driven. The Texas Business Organizations Code, under which many associations incorporate as nonprofit corporations, permits an association to indemnify directors and officers and to purchase liability insurance, but it doesn't require insurance.⁸

The federal and secondary-market overlay operates as a separate layer. Fannie Mae, Freddie Mac, FHA, and the National Flood Insurance Program impose insurance conditions on projects whose units are financed conventionally or through FHA, and these frequently exceed any state-law floor and, in practice, drive fidelity, flood, and property coverage decisions, including for planned communities that have no statutory floor at all.⁷ Distinct again from statute is the Texas catastrophe market, which shapes real coverage cost and availability. Gulf Coast hurricane and windstorm exposure — Hurricane Harvey in 2017 being the reference event — drives named-storm and hurricane percentage deductibles; the Insurance Council of Texas placed Harvey's insured losses at $19 billion, a total that included an estimated $11 billion for the NFIP, $3 billion of private property losses, and a record $4.75 billion of private and commercial auto insured losses.¹⁵ Coastal-county associations often place wind and hail coverage through the Texas Windstorm Insurance Association (TWIA), the residual-market windstorm insurer.¹¹ Texas also leads the nation in hail losses; the Insurance Council of Texas reported the state "again led the nation with 878 hail events in 2024" and "also led the country with 169 tornadoes," with total 2024 insured losses in Texas exceeding $47.2 billion.¹⁶ Hail exposure drives roof-specific and wind-and-hail deductibles and cosmetic-damage exclusions, and winter-storm exposure (Winter Storm Uri in February 2021) and wildfire exposure round out the risk. The Smokehouse Creek Fire, which the Texas A&M Forest Service reported burned 1,058,482 acres before reaching 100 percent containment — ignited February 26, 2024, in Hutchinson County — is the largest wildfire on record in Texas history, and inland and coastal flooding brings the NFIP into play.¹⁷ None of these is a statutory HOA mandate.

Section 3: Coverage allocation and compliance obligations

A. Association coverage obligations

For condominiums, the master policy must carry property insurance on the insurable common elements — and on units in buildings with horizontal boundaries — at no less than 80 percent of replacement cost or actual cash value, plus commercial general liability insurance; both are mandatory under § 82.111, subject to the reasonably-available qualifier, and neither may be waived except where all units are nonresidential.⁴ For planned communities, whatever the association must insure is set by the recorded declaration, a contractual obligation, because Chapter 209 imposes no statutory coverage floor.³

B. Coverage allocation between association and owners

Under § 82.111, the condominium master policy covers common elements and, in stacked-unit buildings, the units, but it need not cover owner-installed improvements and betterments; the association policy doesn't prevent an owner from insuring for the owner's own benefit.⁵ The common reader error is assuming the master policy covers the unit interior, personal property, and owner upgrades; it generally doesn't, which is why owners carry an individual unit (HO-6) policy for interior finishes, personal property, and loss assessment. For planned communities, the split between association and owner is contractual, defined by the declaration rather than statute.

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

For condominiums, § 82.111 requires proceeds to be held in trust and applied first to repair or restoration, requires the association to promptly repair or replace damaged insured property, and makes any repair cost exceeding proceeds a common expense fundable by assessment.¹⁰ The deductible follows a tiered rule: dedicatory instruments control, then board resolution, then common expense; an owner who causes the loss may be charged the deductible and any excess.⁹ This is where the Texas catastrophe market bites: hurricane percentage deductibles and roof-specific hail deductibles can push a large share of a windstorm or hail loss onto owners through loss assessment, and coastal wind coverage is often placed through TWIA rather than the standard master policy.¹¹ For planned communities, the deductible and proceeds treatment is whatever the declaration provides, not a statutory scheme.³

D. Fidelity, D&O, and disclosure

Fidelity (crime) and D&O coverage aren't statutory obligations under § 82.111 or Chapter 209; for both community types they arise from the declaration or from lender requirements, and the Texas Business Organizations Code authorizes but doesn't require indemnification or insurance for directors and officers.⁸ The most consequential compliance point is documentary: § 82.111 requires that the insurer give the association at least 30 days' written notice before cancellation or nonrenewal, and separately preserves a mortgagee's right to require a unit owner to carry additional insurance, so managers should maintain current certificates for owners, purchasers, and lenders.¹³

Section 4: Recent legislative and judicial activity

A. Recent bills

The most material recent legislative action on Texas association insurance is market-facing, centered on the residual windstorm market rather than the condominium insurance statute. The 89th Legislature (2025) didn't amend § 82.111.

B. Recent appellate rulings

No Texas appellate decision from the past 36 months squarely resolves a dispute over § 82.111 insurance obligations, deductible allocation, or the application of proceeds; published Texas authority construing the section is sparse.

C. Active legislative debates

TWIA funding, rate adequacy, and coastal windstorm availability remain active areas of legislative and regulatory attention, and property-insurance affordability and nonrenewal pressures continue to draw proposals; because Texas legislates in biennial regular sessions, the next regular opportunity to amend the condominium insurance statute or add an insurance provision to Chapter 209 falls in 2027 absent a special session.¹⁸

Section 5: National positioning and related coverage

Texas 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, and Texas belongs here through the UCIOA-based Chapter 82 for condominiums. The second is comprehensive non-uniform prescriptive states, notably Florida (Chapter 718) and California (Davis-Stirling), which spell out coverage in detail. The third is CC&R-primary states such as Alabama and Arkansas, where the declaration governs. Texas is distinctive because it has a comprehensive property owners' association statute (Chapter 209) that nonetheless imposes no insurance scheme, so on insurance a Texas planned community resembles a CC&R-primary community, all against one of the most catastrophe-exposed markets in the country. For a multi-state operator entering Texas, condominium obligations track the UCIOA-based Chapter 82 Section 3-113 pattern, planned-community coverage is declaration-driven despite Chapter 209, older condominiums may involve Chapter 81, and Gulf hurricane, hail, and TWIA availability are Texas-specific market factors. As of the last verification date, Texas hadn't moved to add an insurance scheme to Chapter 209, and recent legislative energy has gone to TWIA funding reform rather than association insurance mandates.

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

1. Tex. Prop. Code § 82.111 (Insurance), Texas Uniform Condominium Act, Texas Legislature ↩
2. Tex. Prop. Code § 82.111(m) and legislative history (added Acts 1993, 73rd Leg.; amended Acts 2013, 83rd Leg., R.S., Ch. 678 (H.B. 2075)) ↩
3. Tex. Prop. Code Chapter 209 (Texas Residential Property Owners Protection Act), section list, Texas Legislature ↩
4. Tex. Prop. Code § 82.111(a)(1) (property insurance; at least 80 percent replacement cost or actual cash value) ↩
5. Tex. Prop. Code § 82.111(b) (horizontal-boundary units; improvements-and-betterments exclusion) ↩
6. Tex. Prop. Code § 82.111(a)(2) (commercial general liability, including medical payments) ↩
7. Fannie Mae Selling Guide B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments ↩
8. Tex. Bus. Orgs. Code Chapter 8 (Indemnification and Insurance) and Chapter 22 (Nonprofit Corporations) ↩
9. Tex. Prop. Code § 82.111(c), (j), (k) (commercially reasonable deductibles; deductible allocation) ↩
10. Tex. Prop. Code § 82.111(f), (i) (proceeds held in trust; repair-or-replace obligation; excess as common expense) ↩
11. Texas Windstorm Insurance Association Overview, Texas Department of Insurance ↩
12. Tex. Prop. Code § 82.002 (applicability of § 82.111 to condominiums created before January 1, 1994) ↩
13. Tex. Prop. Code § 82.111(c), (h) (reasonably-available notice; 30-day cancellation notice; mortgagee rights) ↩
14. Tex. Prop. Code § 82.111(l) (owner-source-of-loss deductible assessment) ↩
15. "ICT Pegs Hurricane Harvey Insured Losses at $19B," Insurance Journal (Sept. 15, 2017) ↩
16. "Insured Losses in Texas Exceed $47 Billion in 2024," Insurance Journal (Sept. 5, 2025), citing Insurance Council of Texas ↩
17. "Smokehouse Creek Fire largest in Texas history," Texas Farm Bureau, citing Texas A&M Forest Service ↩
18. H.B. 3689, 89th Legislature (2025), bill analysis, Texas Legislature ↩
19. Texas Windstorm Insurance Association Overview, Texas Department of Insurance (H.B. 2517 premium/maintenance tax exemption; H.B. 2518 premium-financing prohibition) ↩
20. Sunchase IV Homeowners Ass'n v. Atkinson, No. 20-0682 (Tex.), Texas Judiciary; Schwartzott v. Etheridge Prop. Mgmt., Nos. 14-11-00950-CV & 14-11-00951-CV (Tex. App.—Houston [14th Dist.] Apr. 30, 2013) ↩