Texas Condo Association Master Policy Insurance

“To the extent reasonably available” is doing real work

Section 82.111(a) conditions the requirement on the insurance being reasonably available. Section 82.111(c) then says that if the insurance described is not reasonably available, the association shall cause notice of that fact to be delivered or mailed to all unit owners and lienholders. The statute anticipates that the market may not always offer what it asks for, and it substitutes a disclosure duty when that happens. Boards in constrained markets should treat that notice obligation as live rather than theoretical.

What the declaration can add

Section 82.111(c) also states the declaration may require the association to carry other insurance, and that the board may in any event carry any other insurance it considers appropriate to protect the condominium, the association or the unit owners. Policies maintained under Section 82.111(a) may provide for commercially reasonable deductibles as the board determines. The statute sets a floor and leaves headroom above it.

It also states expressly that nothing in the section affects the right of a holder of a mortgage on a unit to require a unit owner to acquire insurance. Lender requirements sit outside the statute and are not displaced by it.

Which organization purchases this insurance?

The condominium association, its property management company, its board of directors and its individual unit owners are separate legal entities with different responsibilities, different insurance obligations and different sources of liability.

• The association purchases the master property program required by Section 82.111, the commercial general liability that section also requires, directors and officers liability for board decisions, and commonly fidelity or crime protection for association funds.
• The management company insures its own operations, errors and omissions, its own general liability, workers’ compensation, cyber, employment practices and crime. None of these insure the association, and the association’s master policy does not insure the manager.
• Board members are generally protected through the association’s directors and officers program, not through the management company’s errors and omissions policy.
• Unit owners carry their own policy for personal property, improvements and betterments, personal liability and loss assessment exposure. Because Section 82.111(b) expressly excludes owner improvements from what the association must insure, this is not optional in practice.

A management agreement can require additional insured status, indemnification, waiver of subrogation or primary and noncontributory wording in either direction. Those provisions change who responds first, but only if the endorsement actually exists. A certificate of insurance does not create coverage, a management agreement does not replace insurance, and contract wording does not override policy wording.

What North Texas condominium boards should review before renewal

Section 82.111 sets a floor, not a program. A renewal is the point where the distance between that floor, the declaration, the lender’s requirements and the association’s actual exposure is still visible and can still be changed. The items below are what we read before telling a board in Dallas, Tarrant, Collin or Denton County whether its master program is adequate. Answering them does not require changing carriers.

• Replacement cost adequacy. The 80 percent in Section 82.111(a) is measured against replacement cost or actual cash value, so the first question is which basis the policy actually uses and whether the insurable value behind it is current. A figure carried forward for several years is a common reason a compliant policy still underinsures. HOA property valuation covers how that number is built and how it drifts.
• Coinsurance and agreed value. Whether a coinsurance condition applies, and whether an agreed value endorsement suspends it, changes the arithmetic of every partial loss. The statutory floor says nothing about either.
• Wind and hail deductibles. Programs in this region commonly carry a separate wind and hail deductible stated as a percentage of insurable value rather than a flat dollar amount. Convert that percentage into the figure it produces at current values, then decide how the association would fund it. Section 82.111(c) leaves deductibles to the board as long as they are commercially reasonable, which makes this a board decision rather than a carrier one.
• Ordinance or law. An older regime rebuilt to current code can cost more than the physical loss. Coverage for the undamaged portion, for demolition and for the increased cost of construction sits outside the statutory requirement and has to be asked for.
• Water damage and backup. Stacked units concentrate water losses, and the treatment of backup of sewer or drain, of slab leaks and of resulting damage varies between forms. Read it in the policy rather than assuming it.
• Association and unit owner boundaries. Section 82.111(b) excludes improvements and betterments installed by unit owners, which is where post loss disputes concentrate. Confirm that the declaration, the master policy and what owners are actually told all describe the same boundary. Master policy and unit owner responsibility sets out the division.
• Liability limits and medical payments. Section 82.111(a) requires commercial general liability including medical payments in an amount the board determines but not less than the declaration specifies, so read the declaration before accepting a renewal limit. Whether an umbrella sits above it is a board decision, not a statutory one.
• Directors and officers. Board decisions, including decisions about insurance, are a liability exposure of their own. The statute does not require directors and officers cover, and the management company’s errors and omissions policy does not supply it.
• Management agreement insurance requirements. Additional insured status, waiver of subrogation, indemnification and primary and noncontributory wording only operate if the endorsement exists, on the right policy, in the right direction. Read the current management agreement against the current certificates each year.
• Exclusions and endorsements. The exclusions and endorsements decide what the limits mean. Changes arrive quietly at renewal, so compare the renewal form against the expiring form rather than comparing premiums.
• Loss history. Several years of loss runs show which exposures are actually producing claims, and they are the evidence any later conversation about deductibles, valuation or plan design has to start from.

Boards and managers who want that review in writing can send the declaration and the current master policy through the coverage audit.