Texas Multifamily Quotes

Most Texas boards meet their master policy in the worst week, when hail has opened a roof and an owner asks who pays for the ceiling. The answer sits in the declaration, backed by a statute most directors have never read. Texas Property Code Section 82.111 does not suggest that a condominium association carry insurance. It requires it.

Section 82.111(a) is the operative language. Beginning no later than the first conveyance of a unit to a person other than a declarant, the association shall maintain, to the extent reasonably available, property insurance on the insurable common elements against all risks of direct physical loss commonly insured against, including fire and extended coverage, in a total amount of at least 80 percent of replacement cost or actual cash value as of the effective date and at each renewal date. It must also carry commercial general liability insurance, including medical payment insurance, in an amount determined by the board but not less than any amount the declaration specifies.

The Subsections Boards Get Backwards

• Horizontal boundaries pull the units in: Under Section 82.111(b), if a building contains units having horizontal boundaries described in the declaration, meaning stacked units, the association property insurance must include the units, not merely the common elements.
• Owner upgrades stay out: Coverage need not include improvements and betterments installed by unit owners. That clause is the seam where the master policy and the owner HO-6 meet, and where most coverage fights start.
• Eighty percent is a floor: Agency project review expects 100 percent of insurable replacement cost, so a board at the minimum can comply and still make its own units hard to finance.
• You cannot draft around it: Section 82.111(m) permits waiver only where all units are restricted to nonresidential use, and Section 82.111(d) makes each owner an insured as to liability from their undivided interest in the common elements.

Condominium and HOA Are Different Animals

Chapter 82 governs condominium regimes. A detached subdivision association falls mainly under Chapter 209, the Texas Residential Property Owners Protection Act, which has no comparable insurance requirement, so the duty comes from the declaration and from board fiduciary duty. A POA owning a clubhouse, pool, private streets and detention ponds still holds a property schedule and premises liability no statute forces it to insure.

Geography rewrites it. A high-rise in Austin or Dallas is one structure with a garage and elevators. A garden conversion in Arlington or Irving is twenty separate roofs spread across Tarrant and Dallas counties, and National Weather Service records put Tarrant ahead of every other Texas county for hailstorms logged since 1955. A beachfront regime in Corpus Christi sits in Tier 1, where wind and hail leaves the property policy. Call (512) 893-3795.

Three phrases decide most of your exposure and none appear in the statute. The declaration selects among them and the policy has to match; when the two disagree the association pays the difference out of assessments.

• Bare walls: Structure, roof, exterior and common elements only, stopping at the unfinished interior surfaces. On a stacked building this sits in tension with Section 82.111(b).
• Single entity: Also called original specifications. The units as originally built, including builder-grade finishes, but not owner improvements and betterments. This tracks the statute most closely.
• All in: Owner upgrades included. Cleanest at claim time, one adjuster and one deductible, and the priciest.

The HO-6 Gap and Loss Assessment

• Walls-in coverage: Under a bare-walls form the owner HO-6 has to restore the unit interior, and undersized dwelling limits are the most common owner-side gap in Texas.
• Loss assessment: This responds when the association levies a special assessment after a covered loss, including the owner share of the master deductible, and it is routinely left at a token default limit. Where the deductible exceeds the agency cap, project eligibility can hinge on owners carrying enough of it. Section 82.111(g) confirms owners may insure themselves, so fix it in a written annual notice.

Directors and Officers, Fidelity and Crime

• D and O is not statutory: Section 82.111 mandates property and general liability only, and general liability answers bodily injury and property damage, not the election disputes, enforcement claims and records demands boards get sued over.
• The Texas immunity backstop has a condition: Civil Practice and Remedies Code Chapter 84 treats a homeowners association described in Section 528(c) of the Internal Revenue Code, or exempt under Section 501(a), as a charitable organization. Section 84.006 caps its liability at 500,000 dollars per person and 1 million dollars per single occurrence for death or bodily injury, and Section 84.007(g) conditions that cap on carrying liability insurance in at least those amounts.
• Fidelity and crime: It must reach anyone handling association funds, including the management agent. Fannie Mae exempts projects of 20 units or fewer and amounts of 5,000 dollars or less. Otherwise the measure is the maximum funds in custody at any time, dropping to three months of assessments where the project meets any one of Fannie Mae's financial controls, such as separate working and reserve accounts or two board signatures on reserve checks.

The Coverages Boards Leave Off

• Ordinance or law: A 1984 regime rebuilt after a major loss goes up to current code, and Coverages A, B and C pay the undamaged portion, demolition and increased construction cost.
• Loss of assessment income: Funds operations during the rebuild. Twelve months is the default; contractor backlogs after a regional event make eighteen honest.
• Water, freeze and machinery: Aging supply lines in pre-1990 buildings drive attritional loss, and the February 2021 statewide freeze burst pipes across Texas association stock. Elevators, boilers and chillers need equipment breakdown, excluded by the standard form.
• Flood: Excluded from every master policy. The NFIP Residential Condominium Building Association Policy insures the building in the association name and settles at replacement cost when insured to at least 80 percent of that cost, but its building limit is capped on a per-unit basis, so regimes with high replacement cost per unit run out of NFIP limit. In Houston and on the coast, private excess flood is a core layer.

Every hail claim in Texas produces the same argument, and the statute anticipated it. Who pays the master policy deductible, the association or the owners whose units were damaged?

• Above the deductible: Under Section 82.111(k) the dedicatory instruments determine who pays. If they are silent the board may adopt a resolution, and absent that it is a common expense shared by every owner through the declaration's allocated interests, damaged unit or not. Section 82.111(j) handles the other end, putting a repair costing less than the deductible on whoever would be responsible absent insurance. Adopt the resolution at a quiet meeting; after a storm it invites challenge.
• Owner-caused damage: Section 82.111(l) lets the association assess the deductible and costs above proceeds against the owner and the unit where damage is due wholly or partly to that owner or the owner guest or invitee.

Deductible Structure Is Where the Money Is

• Percentage wind and hail: Texas association property commonly carries a 1 to 3 percent wind and hail deductible, with 2 percent the inland norm after the 2022 to 2024 storm years. Section 82.111(c) allows commercially reasonable deductibles as the board determines.
• The basis question: A percentage applied to total insured value across a whole schedule behaves nothing like one applied per damaged building, and per building is usually better for a regime with many roofs. Agency standards also cap the master deductible at 5 percent of coverage.
• Roof settlement: Roof payment schedules and actual cash value endorsements commonly begin between roof year 10 and 15 in high-hail counties, and most assume the roof is as old as the building unless you prove replacement. Our guide to Texas wind and hail deductibles works the arithmetic.

Insurable Value, Reserves and Underwriting

• Replacement cost, not market value: Insurable value is the cost to rebuild, not resale price or appraisal. Section 82.111(a) measures the 80 percent floor as of the effective date and at each renewal, a standing instruction to revalue annually.
• Reserves and audits: Texas has no Florida-style reserve study mandate, but agency project review looks for a budget allocating roughly 10 percent of annual income to replacement reserves, or a study showing adequate funding. Section 82.114 requires an independent annual audit of association records as a common expense.
• What drives the rate: Construction class and year built, roof age and permit history per building, plumbing and electrical updates, protection class, sprinklers, amenities such as pools and gates, and five years of loss runs.

The Board Renewal Calendar

• 150 to 90 days out: Update the statement of values, build the per-building roof schedule with install dates and permit numbers, pull loss runs, and set the marketing strategy in the minutes. Duplicate submissions of one schedule to one carrier get a risk blocked, so use one agent of record per market, in writing.
• 60 days out to binding: Compare on structure before price: master form, deductible basis, ordinance or law limits, loss of assessment income period and roof valuation. Section 82.111(h) bars an insurer from cancelling or non-renewing less than 30 days after written notice to the association.

Prices vary by market: San Antonio, Fort Worth and El Paso, or call (512) 893-3795.