Insurance

Five layers, and the highest one wins

Nobody hands a board a single insurance rulebook. There are five layers stacked on top of each other, and where they set different numbers, the association and its owners each have to meet whichever layer asks for the most, not an average of the five.

Federal and quasi-public catastrophe programs sit outside ordinary state HOA law entirely. Flood and, in California, earthquake coverage run on their own separate systems with their own dollar formulas, which is why they get their own lessons rather than folding into "property insurance." See Flood insurance and Earthquake coverage.

Where a project relies on Fannie Mae eligible financing, Fannie Mae's own guide can set a higher floor than state law, because failing it can make units unfinanceable regardless of what state law alone requires. Below that sits the state statutory floor for the association's own policy, and this is where the biggest state-to-state gap in this course lives: some states set a floor of 80 percent of actual cash value, while Florida requires something stricter.

"Adequate property insurance, regardless of any requirement in the declaration of condominium for coverage by the association for full insurable value, replacement cost, or similar coverage, must be based on the replacement cost of the property to be insured as determined by an independent insurance appraisal or update of a prior appraisal."

Source: Florida Statutes §718.111(11)(a), The Florida Senate

Governing documents can raise the bar above the statutory floor but not lower it, and in most states they, not state law, are what actually fix how much of a unit's interior the master policy rebuilds. See Bare-walls vs all-in coverage. The individual HO-6 policy then fills whatever is left, and its own limits are frequently set by a lender rather than by state law. Which layer actually controls in your building depends on your state, your financing, and your declaration.

Three things boards assume that are not true

"The master policy covers everything inside my unit." Not necessarily. Whether a loss inside a unit gets rebuilt depends on whether the policy is written bare walls, restoring only an unfinished shell, or something broader, and that split is set by the policy and declaration, not by a uniform national rule. See Master policy vs HO-6 and Bare-walls vs all-in coverage.

"State law requires owners to carry their own HO-6 policy." That is true in DC, which mandates it by statute, and false in Florida, where neither the condominium statute nor the homeowners' association statute imposes that duty at all. Most Florida owners who carry HO-6 coverage do so because their declaration or their mortgage lender requires it, not because the state does. Check your own state's statute and your declaration; see Owner insurance requirements.

"A certificate of insurance proves a vendor is covered and protects the association." A COI only certifies that a policy existed on the day it was issued.

"certificates of insurance only certify coverage existed on the day the COI was issued"

Source: The Limitations of Certificates of Insurance, Risk Management Magazine (RIMS)

It does not alter the underlying policy and does not by itself reduce or transfer risk. A board that files a COI at contract signing and never checks again has not actually confirmed the vendor stayed insured through the job. See Certificates of insurance.

Why this got harder, and where it is easing

Association survey data from the Community Associations Institute found that more than 90 percent of responding communities saw a premium increase at their most recent renewal, and 11 percent had coverage canceled or not renewed, most often absorbed through higher individual assessments or operating funds rather than a special assessment. In Florida specifically, the average residential property insurance premium reached $3,023 in early 2025, a 34 percent increase from late 2022, well above general inflation over the same period. That is a Florida-specific, dated figure, not a national one.

The picture is not one-way. Florida reinsurance pricing was reported down 22.8 percent at the June 2025 renewal, attributed in part to 2022 legislative reforms, and Florida's state regulator reported more than 350,000 policies moved from the state's insurer of last resort, Citizens, back to private carriers in 2024 alone. California took a different route to the same problem: its FAIR Plan, also an insurer of last resort, grew from roughly 140,000 policies in 2015 to about 4 percent of the state's entire residential market by 2023, and the state raised FAIR Plan commercial limits in 2025 specifically to serve associations that could not find coverage elsewhere. See Rising premiums and High-risk markets.