Rising HOA insurance premiums have put more pressure on many associations across Texas, where neighborhoods are more prone to severe weather and face higher repair costs. What can the HOA board do to handle this while striking a fair balance for its residents?
What is HOA Insurance?
HOA insurance is coverage purchased by a homeowners association to protect association-level risks rather than an individual owner’s personal risks. Depending on the community, it may protect common areas and other HOA-maintained property.
The exact insurance obligations depend on the type of community. Texas condominium associations are subject to Section 82.111 of the Texas Property Code, which requires certain property and commercial general liability insurance when coverage is reasonably available. For subdivision HOAs that are not condominiums, insurance obligations may instead come from the association’s governing documents or other contractual requirements.
HOA insurance is different from an owner’s individual policy. Homeowners still need coverage for their property and personal liability.
What Does HOA Insurance Cover?
Coverage varies by association, so boards should review their governing documents and policies.
Property Insurance
Property insurance protects physical assets the association is responsible for maintaining. In a condominium, this can include insurable common elements and, in some buildings, portions of individual units.
For condominiums subject to Section 82.111, Texas law requires the association to maintain qualifying property coverage of at least 80% of the replacement cost or actual cash value of the insured property at the policy’s effective date and each renewal date, when such insurance is reasonably available.
General Liability Insurance
General liability insurance helps protect the association when a covered injury or property-damage claim arises from the use or maintenance of common elements.
Section 82.111 also requires Texas condominium associations to maintain commercial general liability insurance, including medical payments coverage, when reasonably available. The board determines the amount unless the declaration sets a minimum.
Directors and Officers Insurance
Directors and officers insurance can help protect the association and its board members against certain claims arising from board decisions or alleged wrongful acts. Policy exclusions should be reviewed carefully.
Crime or Fidelity Coverage
Some associations purchase crime or fidelity coverage to protect association funds from covered theft or dishonest acts. Governing documents or contracts may require this protection.
What Causes Rising HOA Insurance Premiums?
The problem facing associations is part of a wider property insurance challenge in Texas. Spectrum News reported in April 2026 that some Texas homeowners were paying HOA costs of about $100 to $500 per month. A West Houston real estate professional also cited insurance as a major reason for the increase in fees.
Severe Weather and Catastrophe Exposure
Texas faces recurring losses from major storms and other natural hazards. More frequent or expensive losses can lead insurers to reassess the price of covering properties in higher-risk areas.
Higher Construction and Labor Costs
Insurance pricing reflects the cost to repair or replace damaged property. When materials and labor cost more, claim payments can rise as well.
Claims History and Property Risk
An association’s own loss history can affect renewal pricing. Property condition can also matter, particularly when deferred maintenance increases the risk of future damage.
Boards therefore have a financial reason to address maintenance issues before they become larger losses. Better risk management may also strengthen the association’s position when seeking coverage.
Texas Laws on Increasing Insurance Premiums for HOAs
Texas law does not set one specific limit on how much an HOA’s insurance premium can increase. However, state law regulates insurance rates and establishes requirements that associations must follow when higher insurance costs lead to higher homeowner assessments.
Texas Insurance Rate Regulations
For insurance lines covered by Chapter 2251 of the Texas Insurance Code, rates generally cannot be:
- Excessive
- Inadequate
- Unfairly discriminatory
Texas generally follows a file-and-use system for regulated property and casualty insurance rates. Insurers file their rates with the Texas Department of Insurance, although some commercial insurance policies may be subject to different rules.
An increase in insurance premiums is not automatically unlawful simply because the increase is large. The rate must still comply with applicable Texas insurance regulations.
HOA Notice Requirements
If rising HOA insurance premiums cause a residential subdivision association to consider increasing assessments, the board must follow the meeting and notice requirements under Chapter 209 of the Texas Property Code.
A board generally cannot consider or vote on an assessment increase outside a properly noticed open meeting. This also applies when the association is considering a special assessment.
Depending on the notice method used, homeowners must receive advance notice of the meeting at which the increase will be discussed or approved.
Assessment Limits in Governing Documents
Texas law does not impose a universal cap on rising HOA fees for all associations. Instead, an HOA’s bylaws, declarations, and other governing documents may establish their own limits.
These documents may:
- Cap annual assessment increases
- Require homeowner approval above a certain threshold
- Set procedures for special assessments
- Require a particular voting process
Boards should review their governing documents before raising assessments to cover rising insurance premiums.
Homeowner Voting Requirements
Some assessment increases, or special assessments, may require approval by the membership under the association’s governing documents.
When homeowners must vote, Texas Property Code Section 209.0058 outlines requirements for written ballots and voting procedures. Boards should make sure any required vote complies with both state law and the association’s governing documents.
Texas Condominium Insurance Rules
Condominium associations are generally governed by Chapter 82 of the Texas Property Code rather than Chapter 209.
Section 82.111 requires qualifying condominium associations to maintain certain property and liability insurance when reasonably available. Section 82.112 also allows condominium associations to collect common expense assessments based on the annual budget.
Because insurance is often a major common expense, rising HOA insurance costs can directly affect how much condominium owners must contribute.
Managing Rising Insurance Costs
Rising HOA insurance premiums can affect far more than one line in a Texas association’s budget. A disciplined approach to insurance and maintenance, supported by transparent budgeting, can help boards manage higher costs while remaining compliant with Texas law.
Creative Management Company offers a full range of management services to HOAs and condo communities in Greater Houston. Call us today at 713-772-4420 or contact us online to learn more!
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- Everything To Know About Condo Fees In Texas
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