Virginia HOA Insurance Requirements

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

Virginia regulates common-interest-community insurance through two separate statutes that diverge sharply on the point that matters most to a property manager. The Virginia Condominium Act addresses condominium insurance in Va. Code § 55.1-1963, but its property and liability provisions are permissive: the condominium instruments "may require" the association to carry a master casualty policy and a master liability policy, so the operative rule is set by the recorded declaration rather than by a freestanding statutory command.¹ The Property Owners' Association Act (Va. Code § 55.1-1800 et seq.), which governs planned developments, contains a fidelity-bond mandate (§ 55.1-1827) but imposes no comprehensive property, liability, or proceeds scheme, so planned-community coverage is governed by the recorded declaration and the corporate scaffolding of the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.).²⁴ The Condominium Act is a state-specific statute, not the 1980 Uniform Condominium Act or the UCIOA, so its insurance section must be read from its actual text rather than inferred from a uniform-act model.¹ Fidelity coverage is statutorily required of any association collecting assessments, but directors-and-officers (D&O) liability coverage isn't mandated and is typically declaration-driven or lender-driven.¹⁴ Nationally, Virginia is a state-specific condominium-statute state with a separate property-owners'-association statute that, on property and liability insurance, leaves planned communities in a declaration-driven posture, and it maintains a Common Interest Community Board that licenses community association managers.⁷ The sections below set out the statutory framework, the coverage allocation, and recent activity.

Section 2: The statutory insurance framework

2A. The condominium insurance mandate

The condominium insurance provision is Va. Code § 55.1-1963, in Article 3 of the Virginia Condominium Act.¹ This corrects a common error: the section is § 55.1-1963, not any lower number, and the former Title 55 citation (§ 55-79.81) is obsolete after the 2019 recodification of the property statutes into Title 55.1.¹⁸ Because the Act is a state-specific statute rather than the 1980 Uniform Condominium Act or the 1982 UCIOA, its insurance section can't be assumed to carry uniform-act machinery, and it doesn't.

What the section actually provides is narrower than many practitioners assume. Subsection A is permissive: the condominium instruments "may require" the association to obtain (1) a master casualty policy affording fire and extended coverage in an amount consonant with the full replacement value of the structures within the condominium or comprising the common elements, (2) a master liability policy in an amount specified by the condominium instruments, and (3) such other policies as the instruments require, including workers' compensation and motor-vehicle liability coverage.¹ The replacement-value standard applies to the amount of a master casualty policy where the declaration requires one; it isn't a freestanding statutory command that every association carry property coverage.

Subsection B is the one true mandate: any unit owners' association collecting assessments for common expenses must obtain and maintain a blanket fidelity bond or employee dishonesty insurance policy covering theft or dishonesty by officers, directors, employees, or the community association manager. The statute provides that "such bond or insurance policy shall provide coverage in an amount equal to the lesser of $1 million or the amount of reserve balances of the unit owners' association plus one-fourth of the aggregate annual assessment," and that "the minimum coverage amount shall be $10,000."¹ Subsection C requires that written notice of any policy obtained, changed, or terminated be furnished promptly to each unit owner.¹

What the section doesn't contain should be stated plainly. Section 55.1-1963 doesn't impose a replacement-cost property mandate, doesn't impose a commercial general liability mandate, doesn't contain a "reasonably available" qualifier, doesn't contain an improvements-and-betterments exclusion, and doesn't contain a structured deductible-and-proceeds scheme. It contains no provision on the application of insurance proceeds or on an obligation to repair or replace after a casualty, and it contains no owner-charge or deductible-allocation formula.¹ Those matters are governed by the declaration.

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

The Property Owners' Association Act governs planned communities comprehensively on assessments, disclosure, records, and governance, but on insurance it reaches only fidelity coverage. Section 55.1-1827(B) requires any association collecting assessments for common expenses to maintain a blanket fidelity bond or employee dishonesty policy, in an amount computed the same way as the condominium fidelity mandate — the lesser of $1 million or reserve balances plus one-fourth of the aggregate annual assessment income, with a $10,000 floor.² Beyond that, the Act imposes no property insurance mandate, no liability insurance mandate, and no proceeds or reconstruction scheme.²

This is the defining feature of Virginia insurance practice, and it's easy to get wrong. Because Virginia has a dedicated planned-community statute, a reader may assume it parallels the Condominium Act on insurance. It doesn't. On property, liability, and proceeds, a Virginia planned community resembles a community in a CC&R-primary state: the coverage analysis begins and ends with the recorded declaration and any lender requirements, not with the planned-community statute. For a planned community, there's no statutory property, liability, or proceeds backstop to fall back on if the declaration is silent.

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

For condominiums, the practical rulebook is the recorded declaration read against § 55.1-1963: the declaration sets whether and how much property and liability coverage the association carries, while the statute independently mandates fidelity coverage.¹ For planned communities, the declaration is the primary source for property, liability, and proceeds coverage, with the statutory fidelity mandate sitting alongside it.²

Fidelity (crime) coverage is statutorily required of associations that collect assessments, but D&O liability coverage isn't. The Virginia Nonstock Corporation Act permits a corporation to indemnify directors and officers (§§ 13.1-876 through 13.1-881) and permits the corporation to purchase insurance on their behalf (§ 13.1-882), but it doesn't require D&O insurance.⁴ In Virginia, D&O coverage is therefore a declaration-driven or lender-driven or board-discretion matter, not a statutory command. The recurring error of importing the Fannie Mae fidelity guideline and presenting it as Virginia law should be avoided: Fannie Mae requires fidelity/crime coverage that "must equal at least the sum of three months of assessments on all units in the project" plus reserves, and it accepts a state statutory fidelity requirement in place of its own where one exists.³ That's a secondary-market lender guideline, not a statute.

The federal and secondary-market overlay applies on top of state law and frequently exceeds any state-law floor. Fannie Mae and Freddie Mac project insurance requirements, FHA condominium project-approval conditions, and NFIP flood requirements apply to Virginia associations whose units are financed in the conventional or FHA markets, including planned communities that have no comprehensive statutory property mandate. In practice these overlays drive fidelity, flood, and property coverage decisions. Fannie Mae, for example, requires fidelity/crime coverage for most condo and co-op projects, with an exemption for projects of 20 units or less or where coverage of $5,000 or less would be needed.³ These are lender or federal requirements and aren't Virginia statute.

Market conditions, not statute, shape the hardest coverage decisions. Virginia's most material catastrophe exposure is coastal, concentrated in the Hampton Roads region — Virginia Beach, Norfolk, and neighboring cities — where the area experiences the highest rate of relative sea-level rise on the U.S. Atlantic coast, with the Norfolk tide gauge measuring roughly 5.6 millimeters of rise per year.⁶ Atlantic hurricane and windstorm risk and chronic tidal and storm-surge flooding drive named-storm and hurricane percentage deductibles and heavy reliance on the NFIP in Special Flood Hazard Areas. Severe convective storms affect the interior, and riverine flooding is significant in the mountains and Piedmont. These factors affect availability and cost but aren't statutory HOA mandates.

Section 3: Coverage allocation and compliance obligations

A. Association coverage obligations

For condominiums, the master policy carries what the condominium instruments require: typically a master casualty policy on the structures and common elements — in an amount consonant with full replacement value where the declaration requires such a policy — and a master liability policy in the amount the instruments specify (Va. Code § 55.1-1963(A); declaration-set, not statutorily mandated).¹ Every condominium association collecting assessments must also carry a fidelity bond (§ 55.1-1963(B); mandatory, not variable by declaration).¹ For planned communities, property and liability coverage is whatever the declaration requires; there's no statutory floor, though the fidelity-bond mandate of § 55.1-1827(B) applies.²

B. Coverage allocation between association and owners

The master policy generally covers the common elements and, in condominiums, the building structure as the declaration defines it; it doesn't cover the owner's personal property or, in most Virginia declarations, the unit interior and owner improvements and betterments. The most common reader error is assuming the master policy covers the unit interior; it typically doesn't. Owners fill that gap with an individual unit-owner policy (an HO-6), which insures interior improvements, personal property, and personal liability, and which commonly includes loss-assessment coverage. This allocation is contractual, set by the declaration, in both condominiums and planned communities.¹

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

Virginia's condominium statute contains no deductible-allocation scheme and no proceeds or repair-or-replace rule, so all three are governed by the declaration — contractual, for both condominiums and planned communities.¹ A declaration may assign the master-policy deductible to the association, to the owner whose unit is the source of a loss, or to owners generally through assessment. Where the declaration allocates the deductible or an uninsured amount to owners, the owner's exposure runs through a common-expense assessment or a direct charge, and an owner's loss-assessment coverage is the usual backstop.⁵ In Hampton Roads, hurricane and named-storm percentage deductibles can shift a large share of a windstorm loss onto owners through this mechanism, which makes the deductible-allocation language in the declaration a material operational term.

D. Fidelity, D&O, and disclosure

Fidelity coverage is statutorily mandated for condominium and planned-community associations that collect assessments (§ 55.1-1963(B); § 55.1-1827(B)).¹² D&O coverage isn't statutory and is declaration-driven or lender-driven or a matter of board discretion, with the Nonstock Corporation Act supplying indemnification authority.⁴ On disclosure, the Virginia Resale Disclosure Act requires the resale certificate to describe insurance coverage the association provides for the benefit of owners — including fidelity coverage — and any coverage recommended or required of owners, and, as amended effective July 1, 2025, to state that the governing documents may make an owner responsible for payment of all or part of the deductible when a claim is made (§ 55.1-2310; applies to condominiums and planned communities).⁵ Condominium public offering statements must also describe the association's insurance and, under 18VAC48-30-330(C), "explain that the association is the only party that can make a claim under the master policy and is the sole decision-maker as to whether to make a claim, including a statement as to the circumstances under which a unit owner could be responsible for payment of the deductible."⁹

Section 4: Recent legislative and judicial activity

A. Recent bills

No 2024, 2025, or 2026 bill amended the Condominium Act insurance section (§ 55.1-1963) itself, and none added a property, liability, or proceeds insurance mandate to the Property Owners' Association Act.

B. Recent appellate rulings

No published or unpublished decision of the Court of Appeals of Virginia or the Supreme Court of Virginia decided between July 2023 and July 2026 squarely addresses condominium or planned-community insurance obligations, coverage allocation, master-policy deductibles, insurance proceeds, or repair-or-rebuild disputes. Condominium and association appeals decided in that window turned on non-insurance issues such as declaration amendment and special assessments. The controlling Virginia authority on condominium subrogation predates the window.

Trial-level insurance disputes proceed through the Virginia Circuit Courts, with appeals of right to the Court of Appeals of Virginia — whose civil appellate jurisdiction was expanded to general civil appeals effective January 1, 2022 — and further discretionary review by the Supreme Court of Virginia.¹³

C. Active legislative debates

The most material recent pressure on Virginia association insurance is market-driven, centered on the cost and availability of coastal windstorm and NFIP flood coverage in Hampton Roads, rather than statutory. The General Assembly has declined to legislate a condominium deductible-allocation rule; an earlier measure, SB 623, "Condominium Act; responsibility for insurance deductibles," which would have amended the predecessor statute (former § 55-79.81), failed, leaving deductible responsibility to the declaration and to the resale-disclosure regime enacted in 2025.¹⁴

Section 5: National positioning and related coverage

Association insurance regulation nationally falls into three broad categories: condominium-statute states on the Uniform Condominium Act or UCIOA model that impose a Section 3-113 style mandate — replacement-cost property, commercial general liability, and a structured deductible-and-proceeds scheme; comprehensive non-uniform prescriptive states, notably Florida (Chapter 718) and California (Davis-Stirling); and CC&R-primary states such as Alabama and Arkansas. Virginia is distinctive. Its condominium statute is state-specific and, on property and liability, permissive rather than prescriptive; its Property Owners' Association Act imposes no property, liability, or proceeds scheme, so planned communities resemble CC&R-primary communities on those coverages; it recodified its common-interest statutes from Title 55 to Title 55.1 in 2019; and it maintains a Common Interest Community Board that both registers associations and licenses community association managers.⁷⁸ For a multi-state operator entering Virginia, condominium obligations follow the state-specific Condominium Act in the Title 55.1 numbering, planned-community property coverage is declaration-driven despite the existence of the Property Owners' Association Act, community association managers must be licensed, and Hampton Roads coastal exposure is a Virginia-specific market factor. Virginia hasn't amended § 55.1-1963 in recent sessions and hasn't added a property or liability insurance scheme to the Property Owners' Association Act.

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

1. Va. Code § 55.1-1963 (Insurance), Virginia Condominium Act ↩
2. Va. Code § 55.1-1827 (Deposit of funds; fidelity bond), Property Owners' Association Act ↩
3. Fannie Mae Selling Guide B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments ↩
4. Va. Code §§ 13.1-876 through 13.1-882 (Indemnification; Insurance), Virginia Nonstock Corporation Act ↩
5. Va. Code § 55.1-2310 (Resale certificate; form and contents), subdivision A 14, Virginia Resale Disclosure Act ↩
6. NOAA Office for Coastal Management and Virginia Institute of Marine Science tidal records ↩
7. Common Interest Community Board, Virginia Department of Professional and Occupational Regulation ↩
8. Acts 2019, c. 712 (recodification of Title 55 into Title 55.1, effective October 1, 2019) ↩
9. 18VAC48-30-330 (Narrative sections; insurance), Common Interest Community Board Condominium Regulations ↩
10. HB 1704 (2025 Regular Session), Resale Disclosure Act; resale certificate; responsibility for payment of insurance deductible (enacted as 2025 c. 14; effective July 1, 2025) ↩
11. SB 808 (2025 Regular Session), Resale Disclosure Act; resale certificate; responsibility for payment of insurance deductible (enacted as 2025 c. 16; effective July 1, 2025) ↩
12. Erie Insurance Exchange v. Alba, Record No. 190389 (Va. May 28, 2020) (Chafin, J.) ↩
13. Va. Code § 17.1-405 (appeals of right to the Court of Appeals of Virginia in civil matters, as expanded effective January 1, 2022) ↩
14. SB 623, "Condominium Act; responsibility for insurance deductibles" (amending former § 55-79.81; failed) ↩