Homeowners Association Insurance (HOA)

Yes. California Civil Code Section 5805 requires HOAs to maintain property insurance and general liability insurance for common areas. Additionally, virtually all HOA governing documents (CC&Rs) contain their own insurance requirements that may exceed the statutory minimums.

Beyond legal requirements, lenders financing homes in HOA communities require evidence of proper master policy coverage — gaps or lapses can prevent homeowners in your community from selling or refinancing, creating significant board liability. Operating without adequate insurance also exposes the association and individual board members to personal financial liability.

These terms describe how much of the physical structure the HOA’s master property policy covers — and directly impact what individual homeowners need in their own HO-6 policies:

Bare Walls-In: The master policy covers only the building’s structure to the bare drywall — studs, framing, roof, and exterior. Everything inside the unit (flooring, cabinets, fixtures, appliances) is the homeowner’s responsibility. Most common in older associations.

Single Entity (Original Spec): The master policy covers original fixtures, cabinets, flooring, and built-ins as originally installed by the developer. Homeowner upgrades and improvements are the owner’s responsibility.

All-In: The broadest form — the master policy covers everything in the unit including owner improvements and upgrades. Least common, but provides the most protection to homeowners.

Your CC&Rs dictate which type is required. We review your governing documents to ensure your policy structure matches your legal obligations — a mismatch is one of the most common and costly mistakes we find in HOA policies.

California’s insurance market has entered what the industry calls a “hard market” — driven by three converging forces: catastrophic wildfire losses (including major fires throughout Sonoma and Napa counties), carrier withdrawals that have reduced competition, and construction cost inflation that has pushed replacement values significantly higher.

When fewer carriers compete for HOA business, pricing power shifts to insurers — and rates rise. In high-risk fire zones like much of the North Bay, this effect is amplified. Many associations have seen premiums double or even triple at renewal.

The outlook is gradually improving as California’s Department of Insurance implements regulatory reforms to attract carriers back to the state — but the timeline is uncertain. In the meantime, working with a specialist like Spina Insurance — who has established relationships with the carriers still writing in California — is the most effective strategy for managing costs while maintaining proper coverage.

A lapsed or cancelled HOA master policy triggers serious consequences on multiple fronts:

Lender requirements: Mortgages on units in your community typically require HOA coverage. Lenders can force-place coverage at the association’s expense — at rates far higher than market alternatives — or call loans in default.

Sales and refinancing: Homeowners in your community may be unable to sell or refinance their units without evidence of adequate HOA insurance, creating significant board liability.

Personal board member exposure: Operating without required coverage violates your CC&Rs and California law, potentially exposing board members to personal financial liability.

Uninsured losses: Any damage to common areas or third-party claims during an uninsured period falls directly on the association — and ultimately its homeowners through special assessments.

If your current carrier has issued a non-renewal or your policy has been cancelled, contact us immediately. We specialize in finding coverage solutions in difficult market conditions, including FAIR Plan alternatives and specialty admitted/non-admitted carrier options.

Yes — and this is one of the most important coverages an HOA board can carry. HOA board members are volunteers making binding decisions on behalf of all homeowners. They can be personally sued for:

• Selective enforcement of rules
• Financial mismanagement
• Discrimination claims
• Failure to maintain common areas
• Improper denial of modification requests
• Breach of fiduciary duty
• Employment-related actions involving staff

General liability insurance does NOT cover these claims. It only covers bodily injury and property damage. D&O insurance is specifically designed for claims arising from board decisions and management actions.

Without D&O coverage, a board member’s personal assets — their home, savings, and investments are directly at risk. Recruiting and retaining qualified board volunteers becomes extremely difficult when personal liability is unprotected. Most HOA attorneys strongly recommend D&O coverage as an essential part of every HOA insurance program.

Underinsurance is the single most common problem we identify when reviewing HOA policies — and it’s almost always invisible until a major claim is filed. Common warning signs include:

• Your replacement cost valuation hasn’t been updated in 2+ years
• Your policy was written without a professional appraisal
• Your insured value seems low relative to what comparable construction costs today
• Your policy uses an Agreed Value rather than a Replacement Cost Endorsement
• Your agent doesn’t specialize in HOA insurance

Construction costs in California have risen 30–50% since 2020. An HOA that was fully covered at policy inception may now face a significant coinsurance penalty at claim time — meaning the insurer will only pay a proportional share of the loss, leaving your association with a devastating out-of-pocket shortfall.

We recommend a formal coverage review at every renewal, and a professional replacement cost appraisal every 3–5 years. For communities in high-growth construction markets or those that have made significant improvements, more frequent reviews are warranted. Call us at 415-382-9714 — we offer complimentary coverage audits for North Bay HOAs.