How much umbrella liability insurance should our HOA buy, and what should the board check first?

By OurHOA · General information · Revised November 8, 2026

How an HOA board sizes umbrella liability insurance: the TX, FL and CO rules, a per-home worksheet, the policies it sits over, and the exclusions to check.

Part of the HOA board handbook: vendors, projects and upkeep.

Buy one if people can get hurt on what you own

An umbrella policy sits on top of the association's general liability policy and pays after that policy's limit runs out. If the association owns a pool, playground, pond, clubhouse or private street, get quotes at every renewal and make the board decide on the record. The reason is arithmetic. Say a 90-home HOA carries $1 million per occurrence and loses a pool injury case for $2.5 million. The $1.5 million above the limit is the association's problem, and it works out to $16,667 per home. No statute or agency we could find tells an HOA what umbrella limit to buy. The worksheet below reaches a number the board can defend. It is not a legal standard. Rules vary by state and by your governing documents. This guide is education, not legal or insurance advice.

What the law sets, which is mostly a floor

Texas. Property Code chapter 209 sets no liability insurance minimum for a subdivision HOA, so the declaration controls. Condominiums are different: section 82.111(a)(2) requires commercial general liability, including medical payments, to the extent reasonably available, in an amount the board sets, but not less than the declaration requires. Texas boards should also read Civil Practice and Remedies Code chapter 84. Section 84.003(1)(C) counts an HOA as defined by Internal Revenue Code section 528(c), or one exempt under section 501(c)(4), as a charitable organization. Section 84.006 then caps the organization's liability at $500,000 per person and $1 million per occurrence for bodily injury or death, and $100,000 per occurrence for property damage. Section 84.007(g) takes that cap away from an organization without liability coverage of at least those amounts for the organization, its employees and its volunteers. Check that your policy treats volunteers as insureds. The cap is no reason to skip the umbrella, because section 84.007(a) removes it for conduct that is intentional, wilfully negligent, or done with conscious indifference or reckless disregard for the safety of others. Florida. Chapter 720 requires fidelity coverage in section 720.3033(5) but names no general liability minimum, so look to the declaration. Colorado. C.R.S. 38-33.3-313(1)(b) requires commercial general liability, to the extent reasonably available, in the amount your documents specify or the executive board deems sufficient, and never less than the documents require. Those words put the decision on the board, so record the reasoning in the minutes. California. Civil Code section 5805 sends tort claims over tenancy-in-common common area to the association instead of individual owners only if general liability coverage reaches $2 million (100 or fewer separate interests) or $3 million (more than 100). Lenders. Fannie Mae's Selling Guide B7-4-01 requires at least $1 million per occurrence for condo and co-op projects unless the project qualifies for a waiver of project review. That section does not mention umbrellas, so ask the lender before you count one toward the $1 million.

Size the limit by what each home would owe

1. List what could cause a serious injury: pool, playground, pond, clubhouse events with alcohol, private streets and gates, employees, any association vehicle. 2. Write down the current general liability limits. 3. Work out what each home would owe for every $1 million a judgment exceeds your coverage: - 30 homes: $33,333 - 60 homes: $16,667 - 90 homes: $11,111 - 150 homes: $6,667 4. Ask the agent for three prices, for example $1 million, $2 million and $5 million, and divide each annual premium by the number of homes. If a made-up quote of $1,800 buys $2 million for 90 homes, the board is weighing $20 a home each year against $22,222 a home in the bad case. 5. Compare each option with your reserve balance. Reserves spent on a judgment leave the roofs and pavement unfunded. Small communities face the larger bill per home. A 30-home HOA with a pool has more reason to look at $2 million than a 150-home HOA with entry monuments and a retention pond. The bill reaches owners through the association. In Colorado, section 38-33.3-311(1) says an action over an act or omission by the association goes against the association, not against individual unit owners. In California, section 5610(a) lifts the usual assessment limits for an extraordinary expense required by a court order. Our guide on how to levy an HOA special assessment covers the steps.

Line up the policies underneath

Commercial umbrellas usually list the policies they sit over on a schedule, with a minimum limit for each. Ask for that schedule before you ask for a price, then check it against what you own. - General liability: your actual limit must meet the schedule. If the umbrella requires $1 million per occurrence and $2 million aggregate and you carry $1 million and $1 million, the association pays for that gap. - Hired and non-owned auto: a volunteer driving to the bank on association business is the claim people forget. Ask whether the umbrella needs this underneath. - Employers liability and workers' compensation: list these if the association has any employee. - Directors and officers: ask directly whether the umbrella sits over the D&O policy. Our guide on buying D&O insurance explains what that policy covers. Ask in writing how the umbrella responds if a primary policy lapses or earlier claims use up its aggregate, and who pays the difference. Match the insureds and the dates. In Colorado, section 313(1)(b) requires the general liability policy to insure the board, the association, the manager, their employees and agents, with owners as additional insureds for common element claims, and to cover claims between insured parties. The umbrella should name the same people. Fannie Mae also requires a separation of insureds or severability of interests provision on the general liability policy. Put the umbrella and the primary on the same renewal date.

Ask whether it reaches the claim you fear

A $5 million limit is worth little if it excludes the pool. Send these to the agent and keep the written answers with the quote. 1. Does this policy follow the terms of the general liability policy, or does it have its own terms? If it has its own, send us the form. 2. Does it exclude swimming pools, diving boards, slides, ponds or lakes? 3. Does it exclude assault, animals, mold, pollution or wildfire? 4. Does it exclude claims by one owner against the association, or claims by owners injured on the common area? 5. If the primary policy excludes a claim, does the umbrella pay anything, and what retention do we pay first? 6. Are defense costs inside or outside the limit? 7. Does it pay punitive damages where state law allows? The NAIC's consumer explainer says personal umbrella policies do not cover them, so do not assume a commercial form does. If a pool exclusion is the only form the agent can find, the board should hear that directly and spend accordingly on the gate, the drain covers and the deck lighting.

Find out who is writing the policy

An umbrella may come from a surplus lines carrier, which is not licensed the way a standard insurer is. The board should know what that gives up. Texas Insurance Code section 981.101 requires surplus lines documents to state that the Texas Department of Insurance does not audit the insurer's finances or review its solvency, and that the insurer is not a member of the state's guaranty association. The Department's guide warns that claims could go unpaid if such a company fails, and says to call its Help Line at 800-252-3439 before buying. Florida section 626.924 requires a stamp saying that the insured lacks Florida Insurance Guaranty Act protection if the insurer goes insolvent, and that no Florida agency approved the policy's rates and forms. In Colorado or any other state, ask the agent whether the carrier is admitted and confirm with the state insurance regulator. Everywhere, write the carrier's financial rating on the comparison sheet.

A timeline, a motion and a note to owners

90 days before renewal: the treasurer finishes the worksheet and sends the agent the amenity list, loss runs and the seven questions. 45 days: three priced options come back, with the underlying schedule and the full form. 30 days: the board votes at a noticed meeting, and the minutes record why it chose that limit. Renewal day: get the binder, confirm the primary meets the schedule, and file the complete policy. Motion: "I move that the board buy a $[amount] umbrella liability policy from [carrier] through [agency] for [dates], at an annual premium of $[amount], with the underlying limits listed on the schedule attached to the quote dated [date]. The board finds this amount sufficient given the treasurer's worksheet dated [date]." A budget note to owners: "This year's budget adds $[amount], about $[amount] per home, for $[amount] of umbrella liability coverage above our general liability policy. A judgment above our insurance would fall on the association and could lead to a special assessment. Ask your own insurance agent about loss assessment coverage, and check its limit."

Where boards get this wrong

- Reading only the declarations page. The limit is on page one, and an exclusion that matters can sit on an endorsement near the back. - Telling the umbrella carrier late. After a serious injury, notify it in writing at the same time as the primary carrier. - Assuming the umbrella covers board decisions. Unless it says so, a fair housing complaint still belongs to the D&O policy. - Letting the primary change at renewal without comparing it to the schedule.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

More on dues & money

Or browse all hoa dues, fees & money guides.