HOA insurance is one of the most important responsibilities an association board oversees. It protects the community’s physical assets, safeguards association finances, and helps shield board members from personal liability.
As we head into 2026, insurance costs are rising, policies are becoming more restrictive, and regulatory scrutiny continues to increase.
For many boards, insurance can feel confusing or overly technical. However, understanding HOA insurance requirements is a fiduciary duty, not an optional task.
This guide explains the types of insurance HOAs are typically required to carry, optional coverages that reduce risk, and how often policies should be reviewed, with a specific focus on California communities and what boards should expect in 2026.
HOA Insurance Requirements Every Board Must Carry
Most HOAs are required to carry several core insurance policies. These requirements may come from state law, governing documents, lender expectations, or a combination of all three.
Boards should always review their CC&Rs and bylaws alongside state requirements to confirm coverage obligations.
General Liability Insurance
General liability insurance is one of the most basic and essential forms of HOA coverage. It protects the association if someone is injured or their property is damaged in a common area.
This coverage typically applies to incidents such as slips and falls, injuries near shared amenities, or property damage caused by association-controlled areas. Most governing documents and state regulations require general liability coverage, often with minimum policy limits.
Without adequate liability insurance, even a single claim can create significant financial exposure for the association.
Property Insurance
Property insurance protects the association’s physical assets, including shared structures and common elements. The scope of coverage depends heavily on the type of community.
In condominium associations, property insurance often covers the building structure, roofs, and shared systems. In planned developments, coverage may be limited to clubhouses, gates, pools, or other shared facilities.
Boards should confirm exactly what the association is responsible for insuring versus what homeowners must insure individually. Gaps or misunderstandings here are a common source of disputes after a loss.
Workers’ Compensation Insurance
Workers’ compensation insurance is required if the HOA has employees. In some cases, it may also be required when the association uses certain contractors or on-site staff.
This coverage protects the association if a worker is injured while performing duties for the HOA. Even smaller associations can face compliance issues if this coverage is overlooked.
Boards should review vendor agreements carefully and confirm that contractors carry their own coverage when appropriate.
Fidelity or Crime Insurance
Fidelity or crime insurance protects the association against theft, embezzlement, or fraud involving HOA funds. This is especially important for associations that handle large operating budgets or reserve accounts.
Many governing documents require this coverage, and lenders often expect it as well. As financial fraud risks increase, this policy has become a critical part of responsible financial oversight.
Governing Document and State Law Considerations
Beyond basic coverage types, boards must consider how governing documents and state laws interact. CC&Rs and bylaws may require higher coverage limits than state minimums.
California associations, in particular, often face stricter compliance expectations due to regulatory oversight and legal precedent. Boards should ensure insurance decisions are documented and reviewed regularly to demonstrate due diligence.
Optional HOA Insurance Coverages That Reduce Board Risk
While some policies are technically optional, they play a major role in protecting the association and individual board members. Skipping these coverages can leave boards exposed to unnecessary risk.
Directors and Officers (D&O) Insurance
D&O insurance protects board members from personal liability related to governance decisions. This includes claims tied to rule enforcement, financial decisions, or alleged breaches of fiduciary duty.
With increased homeowner litigation and more frequent disputes, D&O insurance is no longer considered optional best practice. It is a core safeguard for volunteer board members acting in good faith.
Employment Practices Liability Insurance (EPLI)
EPLI covers claims related to employment issues, such as wrongful termination, discrimination, or harassment. Even associations with limited staff or contracted management can face these risks.
This coverage is especially relevant when boards oversee employees directly or participate in hiring decisions.
Umbrella or Excess Liability Coverage
Umbrella insurance provides additional liability protection beyond the limits of standard policies. As claim values rise, basic coverage limits may no longer be sufficient.
Umbrella coverage adds an extra layer of financial protection and is often cost-effective compared to the risk it mitigates.
Cyber Liability Insurance
Cyber liability insurance addresses risks related to data breaches, ransomware, and online payment systems. HOAs increasingly rely on digital tools for dues collection, records, and communication.
This coverage helps protect sensitive homeowner information and can reduce the financial impact of a cyber incident.
Why Optional Coverage Matters
Optional does not mean unnecessary. Coverage gaps can expose the association and board members to personal and financial risk. Boards should evaluate optional policies based on their community’s size, operations, and exposure.
How Often HOAs Should Review Insurance Policies and 2026 California Considerations
Insurance should not be reviewed only at renewal time. A proactive review schedule helps ensure coverage remains aligned with evolving risks.
Annual Policy Reviews
Annual insurance reviews are considered best practice. These reviews help boards confirm that coverage limits still reflect property values, amenities, and operational risks.
Regular reviews also create a clear paper trail showing the board acted responsibly and in good faith.
Trigger Events That Require Immediate Review
Certain changes should prompt an immediate insurance review, even if a renewal is not approaching. These include:
- Major property renovations or capital improvements
- New amenities such as pools, gyms, EV chargers, or solar installations
- Changes in staffing, vendors, or management structure
Each of these changes can alter the association’s risk profile and coverage needs.
California-Specific Factors for 2026
In California, boards are facing increased scrutiny related to wildfire exposure, property valuations, and insurance availability. Many associations are also encountering higher deductibles and new policy exclusions.
These conditions make documentation and proactive risk management more important than ever. Boards should be prepared to explain coverage decisions and demonstrate compliance with governing documents and state expectations.
Working With Trusted Advisors
Insurance decisions should not be made in isolation. Experienced insurance brokers, legal counsel, and professional property managers play an important role in helping boards navigate complex requirements.
Collaboration ensures coverage decisions are informed, compliant, and aligned with the community’s long-term interests.
Protecting Your Community Starts With Informed HOA Insurance Decisions
Understanding HOA insurance requirements is a core fiduciary responsibility for every board. It is not simply a checkbox task. Inadequate coverage or missed reviews can expose the association to serious financial and legal consequences.
Boards should take a proactive and documented approach to insurance planning in 2026. Doing so protects the community, the association’s assets, and the individuals who volunteer their time to serve on the board.
Hignell HOA works closely with boards to support compliance, financial oversight, and risk management. Our team helps associations review coverage, understand obligations, and make informed decisions with confidence.
Download the Compliance Bundle to give your board a clear, organized resource for staying compliant, reducing risk, and managing HOA insurance requirements effectively in 2026.
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