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Texas condominium associations face a statutory insurance mandate. Most guidance never mentions it.
Section 82.111 of the Texas Property Code requires a condominium association to maintain, to the extent reasonably available, property insurance on the insurable common elements against all risks of direct physical loss commonly insured against, in a total amount of at least 80 percent of replacement cost or actual cash value — plus commercial general liability including medical payments, in an amount determined by the board but not less than any amount the declaration specifies.
Where the building has horizontal boundaries, that property insurance must also include the units, but need not include improvements and betterments installed by unit owners. That single sentence decides a large share of post-loss disputes.
Key takeaways
- The mandate is statutory Section 82.111 is not guidance or best practice. It is a requirement, subject to the qualifier that the insurance be reasonably available.
- Eighty percent, replacement cost or ACV The statute permits either valuation basis. That is a floor set by the Legislature, not a target set by an underwriter.
- Stacked units are included For buildings with horizontal boundaries the association’s property insurance must include the units themselves.
- Owner upgrades are not The statute expressly states the requirement does not extend to improvements and betterments installed by unit owners.
- Older regimes are still covered Section 82.002(c) extends Section 82.111 to condominiums declared before 1 January 1994, subject to a limitation described below.
- Lenders require more Fannie Mae requires master property coverage at 100 percent of replacement cost and does not accept actual cash value settlement.
What is the difference between the monthly and look-back measurement methods?
Both answer the same question — which employees are full-time and therefore must be offered coverage — but they answer it on different timelines. The monthly measurement method looks at the month you are in. The look-back method looks at a period that has already closed and applies the result forward.
How does the monthly measurement method work?
The employer determines full-time status month by month, asking whether the employee had at least 130 hours of service in that calendar month. There is no advance election, no measurement period and no lock-in. The cost is volatility: an employee can move in and out of full-time status repeatedly, and each change carries an offer obligation with it.
How does the look-back measurement method work?
The employer determines an employee’s status for a future stability period based on hours of service during a preceding measurement period, with an optional administrative period between the two for enrollment processing. An employee who averaged full-time hours during the measurement period is treated as full-time for the whole stability period, regardless of hours actually worked then — and an employee who did not is treated as not full-time for that period.
| What the statute says | What it does not decide | Where the answer comes from | |
|---|---|---|---|
| Property insurance amount | At least 80 percent of replacement cost or ACV | Whether 80 percent is adequate, or whether the lender will accept it | Declaration, lender requirements, appraisal |
| Perils | All risks of direct physical loss commonly insured against, including fire and extended coverage | Flood, earthquake and other excluded causes | Separate policies and endorsements |
| Units | Must be included where the building has horizontal boundaries | Where the unit boundary actually falls | The declaration’s definition of unit and common element |
| Owner improvements | Need not be included | Whether the association nevertheless covers them | Declaration and policy wording |
| Liability | Commercial general liability including medical payments | The limit, beyond the declaration minimum | Board judgment, exposure, lender and vendor requirements |
| Deductibles | May be commercially reasonable as the board determines | Who absorbs the deductible after a loss | Declaration, and any loss assessment coverage owners carry |
| If coverage is unavailable | The association must notify all unit owners and lienholders | What the association does next | Board decision, counsel, market alternatives |
Scroll the table horizontally on narrow screens.
Who this applies to
Authoritative references
Statutes and regulations
- Texas Property Code Chapter 82, Uniform Condominium Act, Sec. 82.111, Insurance — Texas Legislature · effective Current through the 89th 2nd Called Legislative Session, 2025Supports: The 80 percent property insurance requirement, the commercial general liability requirement, the horizontal boundaries rule and the improvements and betterments exclusionVerified 27 July 2026
- Texas Property Code Chapter 82, Uniform Condominium Act, Sec. 82.002, Applicability — Texas Legislature · effective Current through the 89th 2nd Called Legislative Session, 2025Supports: Which condominiums Chapter 82 governs, and which of its sections reach regimes declared before 1 January 1994Verified 27 July 2026
- Texas Property Code Chapter 81, Condominium Act, Secs. 81.0011 and 81.205 — Texas Legislature · effective Current through the 89th 2nd Called Legislative Session, 2025Supports: That Chapter 81 applies only to regimes created before 1 January 1994 and that its insurance provision is permissiveVerified 27 July 2026
Explanatory guidance
- Selling Guide B7-3-03, Master Property Insurance Requirements for Project Developments, B7-3-03 — Fannie Mae · effective 07 February 2024Supports: The 100 percent replacement cost requirement, the unacceptability of actual cash value settlement, and the 5 percent maximum deductibleVerified 27 July 2026
Reviewed 27 July 2026 by Deon R. Williams, M.Jurs, REBC, CLCS, AIC, AINS. Next review July 2027, or sooner if the Texas Legislature amends Chapter 82 or 209 or Fannie Mae revises B7-3-03. 4J Insurance is an insurance brokerage. Nothing here interprets a specific declaration, bylaws, covenants or management agreement, and nothing here is legal advice. Your policy wording, endorsements and governing documents control. Legal interpretation belongs to the association’s counsel.
Reading the statute the way a claim will read it
“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.
Related resources
Continue learning
- What Section 82.111 requires, line by line
- Master policy versus unit-owner responsibility
- Association property valuation
- Subdivision HOA insurance
Use a tool
Property management glossary — Master policy, common elements, loss assessment and property coinsurance, defined.
Discuss the issue
Request a Coverage Audit — Send the declaration and the master policy. We read the insurance article against Section 82.111 and report every divergence.
Questions boards and managers actually ask
Does Section 82.111 apply to a condominium declared before 1994?
Yes. Section 82.002(c) expressly lists Section 82.111 among the provisions that apply to a condominium for which the declaration was recorded before 1 January 1994. The limitation is that those provisions apply only with respect to events and circumstances occurring on or after that date, and do not invalidate existing provisions of the declaration, bylaws, plats or plans.
Is 80 percent of replacement cost enough?
It is what the statute requires as a floor. Whether it is adequate is a separate question, and lenders frequently answer it differently. Fannie Mae requires master property coverage at least equal to 100 percent of the replacement cost value of the project improvements and states that policies settling claims on an actual cash value basis are not acceptable.
Does the association have to insure the inside of a unit?
Where the building contains units having horizontal boundaries, Section 82.111(b) requires the property insurance to include the units. It expressly states the insurance need not include improvements and betterments installed by unit owners. Where the unit boundary falls is defined by the declaration.
Can the association carry a large deductible?
Section 82.111(c) permits commercially reasonable deductibles as the board determines appropriate or necessary. Who absorbs that deductible after a loss is a separate question answered by the declaration and by any loss assessment coverage owners carry.
What if the required insurance is not available in the market?
Section 82.111(c) addresses this directly. If the insurance described is not reasonably available, the association must cause notice of that fact to be delivered or mailed to all unit owners and lienholders.
Does the association’s policy cover the management company?
No, not by default. They are separate legal entities with separate programs. Whether either is named on the other’s policy depends on the management agreement and, critically, on whether the corresponding endorsement was actually issued.
Measurement is a decision you make before the plan year, not during it
The period dates have to be set and documented in advance. Reconstructing them afterwards rarely holds up.