HOA Insurance Requirements 2026: Fidelity Bonds, Master Policies and State Rules for Boards

Published 9 August 2026 · IgeraSolutions Editorial Team · 11 min read · Sources: California Civil Code §5806, Florida Statute §718.111(11)(h), Texas Property Code §209.00595, Nevada NRS 116.3143

Every HOA board handles money — assessments, reserve funds, vendor payments. State law in most (but not all) jurisdictions requires the association to carry fidelity bond or crime insurance specifically to protect owners against theft or embezzlement by the people who control that money, separate from the property insurance that covers the buildings themselves. The two coverages are frequently confused, the dollar thresholds vary sharply by state, and getting either one wrong creates real exposure: an underinsured board can be personally on the hook, and a lender can refuse to fund a unit sale if the association's master policy doesn't meet Fannie Mae or Freddie Mac guidelines. This guide separates the two coverage types and lays out, state by state, exactly what's required and what isn't.

What a fidelity bond actually covers

A fidelity bond (sometimes sold as "crime insurance" or "employee dishonesty coverage") pays the association back if someone with access to its funds steals from it — a treasurer who writes checks to themselves, a management company employee who diverts assessment payments, or a board member who manipulates the books. It typically covers:

• Theft or embezzlement by directors, officers, employees, volunteers or the management company.
• Forgery of checks or financial instruments.
• Computer fraud and funds transfer fraud — increasingly required as associations move to digital payment processing (California explicitly added this in Civil Code §5806).

It does not cover property damage, liability claims from injuries on common property, or the association simply running out of money — those are separate insurance lines (property/casualty and general liability) and reserve funding, respectively.

State-by-state comparison: fidelity bond and crime insurance requirements

Note: this table covers fidelity bond / crime insurance specifically, not general property or liability insurance, which is required in some form in nearly every state regardless of fidelity bond rules.

The Texas nuance: a 20-lot threshold, not a blanket exemption

Texas is often cited as a state with "no fidelity bond requirement," and that shorthand is misleading. Texas Property Code §209.00595 (added effective September 1, 2013, for property owners' associations governing residential subdivisions, with the parallel condominium requirement at §82.102) requires the board of an association of 20 lots or more to obtain and maintain a fidelity bond or fidelity insurance covering losses from dishonest or fraudulent acts by officers, directors, employees and anyone else handling association funds. Coverage tracks the same formula used elsewhere: at minimum, three months' aggregate assessments plus reserve funds, though the governing documents can set a higher floor.

What Texas genuinely does not impose is a requirement for associations under 20 lots — small subdivisions fall outside the statutory mandate entirely. For those communities, whether a fidelity bond exists comes down purely to what the CC&Rs and bylaws say, and, in practice, what the association's lender requires before it will approve financing on a resale.

Master property insurance: what lenders actually check

Separately from fidelity bonds, boards need to keep the master property policy compliant — this is what mortgage lenders scrutinize before approving a loan on a unit resale, and a lapse can freeze sales in the entire community. Fannie Mae's Selling Guide (B7-3, condo/co-op project insurance requirements) generally expects:

• "Special form" (all-risk) property coverage for 100% of the insurable replacement cost of the building(s), not market value.
• Commercial general liability covering the association, board and common areas — typically at least $1,000,000 per occurrence.
• Fidelity/crime coverage for projects with a homeowners association-managed budget, per Fannie Mae's B7-4-02 guideline — this sits alongside, not instead of, any state statutory requirement.
• Directors and officers (D&O) liability — not universally mandated by state statute, but expected by most lenders and virtually all CC&Rs in practice, since it protects volunteer board members from personal liability for governance decisions.

Florida's post-Surfside reforms added a further layer: condominium associations covered by the Structural Integrity Reserve Study requirement must also demonstrate adequate funding for the components identified in a Milestone Inspection — a separate obligation from either the fidelity bond or the general property policy, but one that increasingly affects what insurers are willing to underwrite at all in older coastal buildings.

Self-insurance and coverage gaps: the most common mistakes

1. Treating a general liability policy as if it covers embezzlement. It doesn't — crime and liability are underwritten separately, and a claim for internal theft will be denied under a standard CGL policy.
2. Assuming the management company's bond covers the association. Some management contracts include the manager's own fidelity coverage, but California, Florida and Nevada all require the association's policy to separately extend to the management company's employees — one does not automatically substitute for the other.
3. Letting coverage amounts go stale. Because the required minimum in California and Nevada is tied to reserves plus three months of assessments, a coverage amount set five years ago is very likely too low today if dues or reserve balances have grown.
4. Relying on self-insurance. California's Civil Code §5806 explicitly states self-insurance does not satisfy the statute — a board reserve fund set aside informally as a defense against theft does not meet the legal bar, and likely wouldn't in practice in most other states either.