Tuesday June 24, 2025
What is California HOA insurance?
California HOA insurance is purchased by a homeowners association to protect shared spaces and manage community-wide risks. These policies are typically combined into what's known as a master policy, which serves as the foundation of the association’s insurance strategy.
Under the Davis-Stirling Common Interest Development Act, HOAs in California are required to carry certain types of insurance, including general liability and directors and officers (D&O) coverage. But legal compliance is just one part of the equation. Strong, thoughtfully chosen coverage also helps board members safeguard the community’s financial health when the unexpected happens.A common misconception is that HOA insurance covers everything in a community. In reality, it typically only applies to common areas and association responsibilities. It doesn’t extend into individual homes or units, which means each homeowner is still responsible for securing their own insurance for personal property and interior coverage.
This article is not intended to and does not constitute legal advice or create an attorney-client relationship. Board members should consult their association’s attorney to discuss the legal implications of their decisions or actions prior to proceeding.
Types of HOA insurance coverage in California
California HOA insurance usually includes coverage for general liability, property (sometimes called building or casualty coverage), D&O liability, and fidelity bonds. Each coverage area plays a different role in protecting the association:- General liability insurance protects against claims related to bodily injury or property damage occurring in shared areas. For example, if someone is injured slipping near a community pool, this policy may cover medical costs or legal fees.
- Property insurance covers damage to HOA-owned buildings or physical assets like roofs, lobbies, clubhouses, or fencing due to perils like fire, wind, or vandalism. It typically doesn’t cover the interior of individual units.
- D&O insurance protects board members from personal financial liability stemming from decisions they make in their official capacity. This can help attract and retain board volunteers, knowing they’re protected from personal risk in the event of a dispute.
- Fidelity bond coverage (or crime insurance) protects against losses from theft or fraud involving association funds. It’s especially important in associations with large operating or reserve accounts.
Each of these elements should be tailored to reflect the association’s specific property type, size, and risk profile. Questions on insurance? Contact your FirstService Residential community manager today to secure a comprehensive insurance package for your HOA and enjoy the peace of mind that comes with knowing that your HOA is protected.
Insurance coverage requirements for California HOAs
As of 2025, required coverage for California HOAs typically includes:- General liability insurance: $2 million minimum for HOAs with 100 or fewer separate interests; $3 million minimum for those with more than 100 interests
- D&O insurance: At least $500,000 in coverage for HOAs with 100 or fewer separate interests and at least $1 million for those with more than 100 separate interests
- Fidelity bond/crime insurance: Coverage must equal or exceed the sum of the association’s reserve funds plus three months of regular assessments, and must also include computer fraud and funds transfer fraud protections
What is supplemental coverage?
Supplemental coverage refers to optional insurance policies that go beyond a standard California HOA insurance plan to address risks not included in the master policy. These add-ons help protect associations from exposures like earthquakes, floods, cyber threats, and equipment failures.Earthquake coverage is one of the most common additions, especially since most master policies exclude it. A separate policy can offer essential protection for shared structures. Fire coverage is usually part of a property policy, but in wildfire-prone areas, HOAs may face limitations or non-renewals. Through long-standing partnerships and relationships, FirstService Financial has access to a carrier offering an alternative coverage for high brush zone/wildfire risk, a unique program offering separate wildfire limits, where the association can choose what wildfire limit is right for their community, either a full limit or a lower option.
Other supplemental options include boiler and machinery coverage for critical systems, workers’ compensation for associations with employees, and cyber liability insurance to help protect financial and homeowner data. The right mix of supplemental policies depends on your community’s unique risks. An experienced California HOA insurance broker can help your board identify those gaps and build a plan that supports long-term stability.
Why do HOAs in California need workers’ compensation insurance?
While most associations don’t have employees for which workers’ compensation coverage is required, this type of insurance is beneficial for association board members performing community duties where there is a potential for injury. In this case, workers’ compensation insurance would cover medical expenses associated with a volunteer board member being injured while performing association duties. In addition, workers’ compensation coverage would mitigate risk for associations that need to hire an attorney to defend themselves in the event that a vendor employee gets injured on association property and the vendor insurance lapses in coverage.The risks of not having umbrella coverage
Obtaining a sufficient level of umbrella coverage is crucial when it comes to insuring HOAs with common area amenities (e.g., playground or pool). Without this coverage, associations and homeowners may be vulnerable to significant financial liabilities. Proper HOA insurance coverage can help avoid costly lawsuits and protect associations from unpredictable events. It's essential to note that assuming residents will not sue a homeowners association is misguided. Dispute claims and litigation against associations can arise due to a wide range of factors, the most common being accidental injuries. Jamie George, vice president of Insurance for FirstService Financial, recommends at least a $5 million minimum umbrella coverage for most associations. Meanwhile, smaller associations may require lower amounts based on their unique needs and circumstances to be safe from potential liability issues.Accidental injury incidents can be costly for associations. These case studies demonstrate the potential consequences of negligence and oversight, as well as why it is important to exercise caution when operating any type of association-related activities or events.
Case Study #1 – A 150-unit single family home community was served with a costly lawsuit after an incident involving their noncompliant speed bump, which was a mere 1/8” too tall for regulation. Because of the noncompliant speed bump, the association was liable for millions in injury claims.
Case Study #2 – A resident of a 200-unit community sued their association for $20 million for failing to prevent their child from sustaining injuries from an improperly maintained swing set. Unfortunately for the association, they only had access to a maximum general liability coverage of $1 million — leaving the association responsible for the remaining $19 million.
HOA insurance solutions for your association
FirstService Financial's insurance team has established relationships with broker partners in the HOA insurance industry across the United States. These brokers have been vetted by FirstService Financial's insurance team and are more likely to offer better HOA insurance coverage and premiums for clients. In California, FirstService Financial has three broker partners to place insurance policies for client associations and 29 broker partners across the country available at any time. Their team of 35+ insurance leaders, insurance coordinators, and assistant insurance coordinators work tirelessly to leverage their book of business (client base) for the benefit of individual clients. This means that FirstService Financial always goes the extra mile to place property insurance for clients who otherwise may not be able to renew their policy."Our insurance team takes pride in delivering the best possible coverage tailored to your homeowner’s association’s unique needs, all at the most competitive premiums. With our extensive network of broker partners, carrier relationships and dedicated team, we strive to provide peace of mind and policies that effectively protect your community. "Having access to multiple insurance carriers is essential to guarantee that you get the best possible coverage available for your homeowners association. For associations without the support of an experienced insurance team, renewing their policy or maintaining the same level of coverage can be a challenge. However, with the help of a dedicated insurance team, associations can have peace of mind that their policy will be competitive and appropriate. FirstService Financial’s insurance team is connected to the FirstService Residential transitions team, which conducts detailed reviews of clients' policies to verify that they have all six types of insurance essential for their community. By leveraging its significant network of insurance carriers, FirstService Financial guarantees that clients have the best possible access to insurance policies that meet their unique needs.
Jamie George, vice president of insurance at FirstService Financial
Contact your FirstService Residential community manager today to secure a comprehensive insurance package for your HOA and enjoy the peace of mind that comes with knowing that your homeowners association is protected.
Disclaimer: This article is provided for information purposes only and does not constitute legal advice. Consult with your association attorney.