Community association insurance (California)

Who or what it is designed to protect

• The association as an entity, against tort claims arising from the common area it is responsible for repairing, replacing and maintaining [1]

• The volunteer directors and officers personally, whose exposure is capped at the amount of insurance carried rather than eliminated [4]

• The individual owners, whose tenancy-in-common share of the common area would otherwise expose them to tort claims directly [5]

• The association's reserves and assessment funds against theft by its own directors, officers, employees, and its managing agent [6]

What it commonly covers

• General liability for the common area. The association is responsible for repairing, replacing and maintaining the common area unless the declaration says otherwise [1], and section 5805 assumes one or more general liability policies covering tort causes of action arising from it [5].

• Individual liability of directors and officers. Section 5800(a)(4) requires the association to carry, alongside general liability, coverage for individual liability of officers and directors for negligent acts or omissions in that capacity, in force both when the act occurred and when the claim is made [4].

• Crime, employee dishonesty or fidelity bond, including the managing agent. Required of the association, and where a managing agent or management company is used the coverage must extend to or be endorsed for dishonest acts by that person or entity and its employees [6].

• Computer fraud and funds transfer fraud. Not an optional extension here. Section 5806 requires protection against computer fraud and funds transfer fraud in an amount equal to the required crime or fidelity amount [6].

• Property on the common area. Assumed rather than mandated by the Act, but section 5300(b)(9) requires the annual budget report to summarise the association's property, general liability, earthquake, flood and fidelity policies, which is the list the statute expects to exist [2].

What it commonly excludes or limits

• The owner's own separate interest. The owner of each separate interest is responsible for repairing, replacing and maintaining it unless the declaration provides otherwise [1], and the statutory disclosure warns members that the association's policies may not cover their property or improvements [2].

• The owner's personal property and interior improvements. The required 10-point boldface statement tells members in the Legislature's own words that the association's policies may not cover personal property or real property improvements to or around the dwelling [2].

• Injuries and losses occurring within or around a dwelling. The same required statement extends the warning to personal injuries or other losses that occur within or around the member's dwelling [2].

• The deductible, which does not disappear because a loss is covered. The statutory disclosure states that even if a loss is covered the member may nevertheless be responsible for paying all or a portion of any deductible that applies [2].

• Personal liability of a director who is not a volunteer within the section. A declarant, a person compensated by the declarant, and an owner of three or more separate interests fall outside section 5800, so the statutory cap does not apply to them at all [4].

• Self-insurance in place of the required crime or fidelity cover. Section 5806 states expressly that self-insurance does not meet the requirements of the section, so a funded reserve set aside for the purpose does not discharge the duty [6].

Limits, deductibles, and conditions

• Two different statutory thresholds apply to two different protections, and meeting one does not satisfy the other.

• For the volunteer director and officer cap, both general liability and individual director and officer coverage must be at least $500,000 where the development has 100 or fewer separate interests, and at least $1,000,000 where it has more than 100 [4].

• For the protection that routes owner tort claims to the association instead of to individual owners, general liability must be at least $2,000,000 where the development has 100 or fewer separate interests, and at least $3,000,000 where it has more than 100 [5].

• The higher pair governs in practice: an association carrying $1,000,000 satisfies section 5800 for a development of more than 100 units but leaves its owners outside section 5805, which requires $3,000,000 for that same development [4][5].

• The crime, employee dishonesty or fidelity amount is not a fixed figure. It must equal or exceed the combined amount of the association's reserves and three months of total assessments, so it moves as reserves are funded [6].

• Governing documents may require greater amounts than section 5806 does, and where they do, the governing documents control [6].

• Section 5800's protection is a ceiling rather than an immunity: a volunteer director is not personally liable in excess of the coverage carried, so the limit purchased is the limit of the personal protection [4].

• Deductibles must be disclosed for each policy in the annual budget report, along with the insurer, the type of insurance and the policy limit [2].

Endorsements and connected policies

• Managing agent extension to the crime or fidelity coverage. Section 5806 permits this to be met either by coverage that already includes the managing agent or by endorsement, but it must be one or the other where a management company is used [6].

• Computer fraud and funds transfer fraud in an equal amount. Often sold as an add-on to a crime form, and required by statute at the same amount as the underlying crime or fidelity cover [6].

• Earthquake and flood, where carried. Neither is mandated by the Act, but both are named in the annual budget report summary, so a decision not to carry them is itself disclosed to members [2].

Commonly written alongside: Condominium unit owners insurance, which is where the owner's separate interest, improvements and personal property are meant to sit, Commercial property and commercial general liability, which are the underlying forms the association's programme is usually built from, Workers compensation, where the association directly employs anyone rather than contracting through a management company.

What actually goes wrong on this line

Exposures, as distinct from what the policy protects. This is the question an underwriter is asking, and the one to answer before judging a limit.

• A gap at the boundary between the association and the owner

  Section 4775 splits maintaining from repairing and replacing on exclusive use common area: the owner maintains it, the association repairs and replaces it [1]. A loss that turns on which of those a task was can fall between two policies written against different readings of the same declaration.

• Theft from reserves by an insider or the managing agent

  The association holds reserves and assessments, and the people with access are its own officers, employees and management company. Section 5806 addresses this directly by requiring crime or fidelity coverage extending to the managing agent and its employees, and by refusing self-insurance as a substitute [6].

• Funds moved electronically rather than taken in cash

  A traditional fidelity bond answers employee dishonesty and may not answer a fraudulent transfer instruction. Section 5806 requires computer fraud and funds transfer fraud protection in an equal amount, which is a recognition that the modern loss does not look like the old one [6].

• Structural failure of a balcony, deck, stairway or walkway

  Section 5551 exists because these elements fail. It reaches load-bearing components with a walking surface more than six feet above ground level that are supported in whole or substantial part by wood or wood-based products, together with their waterproofing system [3].

• A construction defect decision made by volunteers

  Section 5800(f)(1) puts two specific decisions inside the scope of association duties: whether to investigate for latent deficiencies before the statute of limitations expires, and whether to sue the builder [4]. Both are decisions a volunteer board can get wrong, and both are now expressly within the protected scope.

• Coverage that quietly stops meeting the statutory threshold

  Because the protections in sections 5800 and 5805 are conditioned on limits actually in force, a renewal placed at lower limits removes protection from directors and owners without any claim having occurred. Section 5810 treats a reduction in limits or an increase in deductible as a significant change requiring notice to members [7][4][5].

What reduces the frequency or the severity

Things a reader can do, each tied to a published source. None of these is a promise about price: whether an insurer credits any of them is an underwriting decision and is not stated here.

• Read the annual budget report summary against the two statutory thresholds

  The summary must state the insurer, type, policy limit and deductible for each policy [2], which is enough to check the limit against the $500,000 or $1,000,000 in section 5800 and the $2,000,000 or $3,000,000 in section 5805 [4][5].

• Recompute the required crime or fidelity amount when reserves change

  The required amount is the combined reserves plus three months of total assessments [6], so a figure that was compliant when the policy was placed can fall below the requirement as reserves are funded, without anything about the policy changing.

• Confirm the managing agent is named or endorsed onto the crime coverage

  Where a managing agent or management company is used, section 5806 requires the coverage to include or be endorsed for dishonest acts by that entity and its employees, which is a specific document to ask for rather than an assumption to make [6].

• Complete and keep the nine-year exterior elevated element inspection

  The inspection must be performed by a licensed structural engineer or architect at least once every nine years [3], and where an element poses an immediate threat the association must act at once, including preventing occupant access until repairs are inspected and approved [3].

• Read the declaration before assuming the statutory allocation applies

  Every allocation in section 4775 is expressed as a default that applies unless otherwise provided in the declaration [1], so the boundary between the association's policy and an owner's policy is set by that document rather than by the Code.

• Treat a lapse or reduction notice as the trigger it is

  Section 5810 requires individual notice when a disclosed policy lapses or is cancelled and not immediately replaced, and also when there is a significant change such as a reduction in limits or an increase in the deductible [7]. Either notice may mean the statutory protections are no longer met.

Information an underwriter commonly requests

This is what is usually asked, not a legal requirement and not a promise that supplying it produces an offer.

• The number of separate interests, because it selects which statutory limit threshold applies under both section 5800 and section 5805 [4][5]
• The declaration itself, because every allocation in section 4775 applies only unless otherwise provided in it [1]
• The current reserve balance and three months of total assessments, which together set the required crime or fidelity amount [6]
• Whether a managing agent or management company is used, and whether it is inside the crime coverage [6]
• Whether the development has exterior elevated elements as defined, meaning wood-supported balconies, decks, stairways or walkways with a walking surface more than six feet above ground level [3]
• The date and findings of the most recent nine-year inspection of those elements [3]
• Whether any policy described in a prior annual budget report has lapsed, been cancelled, or changed significantly [7]
• Whether directors include a declarant or an owner of three or more separate interests, who fall outside the section 5800 class [4]

State variations

• CA. This page is California law throughout. The Davis-Stirling Common Interest Development Act governs, and the specific figures, the nine-year inspection cycle and the required disclosure text are Californian rather than general to community associations [4][3].

Source ledger

7 sources. Every citation number above resolves to a record below. Nothing here sits behind an account.

1. [1]

   California Civil Code Section 4775 (who repairs, replaces and maintains what in a common interest development)(opens the original record on California Legislative Counsel (leginfo.legislature.ca.gov))

   California Legislative Counsel (leginfo.legislature.ca.gov)Primary lawPrimaryJurisdiction CAEffective January 1, 2025Last checked September 5, 2026Updates: Amended only by legislation. Last amended by Stats. 2024, Ch. 288, Sec. 1 (SB 900), effective January 1, 2025.ID ca-civ-code-4775

   What this source supports (4)

   • Section 4775(a)(1) provides that except as provided in paragraph (4), unless otherwise provided in the declaration of a common interest development, the association is responsible for repairing, replacing, and maintaining the common area.
   • Section 4775(a)(3) provides that unless otherwise provided in the declaration of a common interest development, the owner of each separate interest is responsible for repairing, replacing, and maintaining that separate interest.
   • Section 4775(a)(4) provides that unless otherwise provided in the declaration of a common interest development, the owner of each separate interest is responsible for maintaining the exclusive use common area appurtenant to that separate interest and the association is responsible for repairing and replacing the exclusive use common area.
   • Section 4775(a)(1), (a)(3) and (a)(4) each open with the qualifier that they apply unless otherwise provided in the declaration, so the statutory allocation is a default that a particular development's declaration may displace.

   This section is not an insurance provision and is the reason the insurance questions are hard. It splits maintaining from repairing and replacing on exclusive use common area: the owner maintains, the association repairs and replaces. Every clause is subject to the declaration, so a reading of the statute alone cannot tell any particular owner what they are responsible for. The record is here because the association's policy and the owner's policy are written against this split, and a gap between them usually traces to it.

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2. [2]

   California Civil Code Section 5300(b)(9) (the insurance summary in the annual budget report, and its required disclaimer)(opens the original record on California Legislative Counsel (leginfo.legislature.ca.gov))

   California Legislative Counsel (leginfo.legislature.ca.gov)Primary lawPrimaryJurisdiction CALast checked September 5, 2026Updates: Amended only by legislation; verify the current text on leginfo before relying on it.ID ca-civ-code-5300

   What this source supports (6)

   • Section 5300(b)(9) requires the annual budget report to include a summary of the association's property, general liability, earthquake, flood, and fidelity insurance policies.
   • Section 5300(b)(9) requires that, for each policy, the summary include the name of the insurer, the type of insurance, the policy limit, and the amount of the deductible, if any.
   • Section 5300(b)(9) requires the summary to be accompanied by a statement, in at least 10-point boldface type, that the summary provides only certain information as required by Section 5300 of the Civil Code and should not be considered a substitute for the complete policy terms and conditions contained in the actual policies of insurance.
   • The required statement tells members that any association member may, upon request and provision of reasonable notice, review the association's insurance policies and, upon request and payment of reasonable duplication charges, obtain copies of those policies.
   • The required statement tells members that although the association maintains the policies of insurance specified in the summary, the association's policies of insurance may not cover the member's property, including personal property or real property improvements to or around the dwelling, or personal injuries or other losses that occur within or around the dwelling.
   • The required statement tells members that even if a loss is covered, the member may nevertheless be responsible for paying all or a portion of any deductible that applies, and that association members should consult with their individual insurance broker or agent for appropriate additional coverage.

   The disclaimer is the most useful paragraph in the Davis-Stirling Act for an individual owner, and it is written by the Legislature rather than by an insurer or a broker. It says in the statute's own words that the association's policies may not reach the owner's improvements, personal property, or injuries at the dwelling, and that a covered loss can still leave the owner paying a deductible. Recorded here in the statute's terms; the amount of any particular association's deductible and who bears it under its governing documents are separate questions this record does not answer.

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3. [3]

   California Civil Code Section 5551 (inspection of exterior elevated elements: balconies, decks, stairways and walkways)(opens the original record on California Legislative Counsel (leginfo.legislature.ca.gov))

   California Legislative Counsel (leginfo.legislature.ca.gov)Primary lawPrimaryJurisdiction CALast checked September 5, 2026Updates: Amended only by legislation; verify the current text and the current deadline provisions on leginfo before relying on them.ID ca-civ-code-5551

   What this source supports (6)

   • Section 5551(a)(2) defines exterior elevated elements as the load-bearing components together with their associated waterproofing system.
   • Section 5551(a)(3) defines load-bearing components as those components that extend beyond the exterior walls of the building to deliver structural loads to the building from decks, balconies, stairways, walkways, and their railings, that have a walking surface elevated more than six feet above ground level, that are designed for human occupancy or use, and that are supported in whole or in substantial part by wood or wood-based products.
   • Section 5551(b)(1) requires the inspection to be performed by a licensed structural engineer or architect and to be carried out at least once every nine years.
   • Section 5551(i) required the first inspection to be completed by January 1, 2025.
   • Section 5551(k) requires that, for a building for which a certificate of occupancy was issued after the section's operative provisions applied, the inspection occur no later than six years following the issuance of that certificate of occupancy.
   • Section 5551(g)(1) provides that where the inspector advises that an exterior elevated element poses an immediate threat to the safety of the occupants, the inspector shall provide a copy of the report to the association immediately and to the local code enforcement agency within 15 days, and the association shall take preventive measures immediately, including preventing occupant access to the exterior elevated element until repairs have been inspected and approved.

   Recorded because it is now an underwriting input rather than only a compliance obligation. The definition is narrower than balcony: the walking surface must be more than six feet above ground level and the element must be supported in whole or substantial part by wood or wood-based products, so a concrete podium deck is outside it. The dates in subdivisions (i) and (k) are the ones most likely to move by amendment, and the effective date of the current text was not established at the time this record was written, which is why lastCheckedBasis is access rather than recheck.

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4. [4]

   California Civil Code Section 5800 (volunteer director and officer liability, conditioned on the association's insurance)(opens the original record on California Legislative Counsel (leginfo.legislature.ca.gov))

   California Legislative Counsel (leginfo.legislature.ca.gov)Primary lawPrimaryJurisdiction CAEffective January 1, 2018Last checked September 5, 2026Updates: Amended only by legislation. Last amended by Stats. 2017, Ch. 278, Sec. 2 (AB 1412), effective January 1, 2018.ID ca-civ-code-5800

   What this source supports (9)

   • Section 5800(a) provides that a volunteer officer or director described in subdivision (e) of an association that manages a residential or mixed use common interest development shall not be personally liable in excess of the coverage of insurance specified in paragraph (4) to any person who suffers injury, including but not limited to bodily injury, emotional distress, wrongful death, or property damage or loss, as a result of the tortious act or omission of that volunteer officer or director, if all of the criteria in the subdivision are met.
   • Section 5800(a)(1) through (a)(3) require that the act or omission was performed within the scope of the officer's or director's association duties, was performed in good faith, and was not willful, wanton, or grossly negligent.
   • Section 5800(a)(4) requires that the association maintained and had in effect, both at the time the act or omission occurred and at the time a claim is made, one or more policies of insurance including coverage for general liability of the association and coverage for individual liability of officers and directors of the association for negligent acts or omissions in that capacity.
   • Section 5800(a)(4)(A) and (a)(4)(B) set the minimum amounts for both types of coverage at at least five hundred thousand dollars ($500,000) where the common interest development consists of 100 or fewer separate interests, and at least one million dollars ($1,000,000) where it consists of more than 100 separate interests.
   • Section 5800(b) provides that the payment of actual expenses incurred by a director or officer in the execution of the duties of that position does not affect that person's status as a volunteer within the meaning of the section.
   • Section 5800(c) provides that an officer or director who at the time of the act or omission was a declarant, or who received direct or indirect compensation as an employee from the declarant or from a financial institution that purchased a separate interest at a judicial or nonjudicial foreclosure, is not a volunteer for purposes of the section.
   • Section 5800(d) provides that nothing in the section shall be construed to limit the liability of the association for its own negligent act or omission or for any negligent act or omission of an officer or director of the association.
   • Section 5800(e) limits the section to a volunteer officer or director who is a tenant of a residential separate interest in the common interest development, or is an owner of no more than two separate interests whose ownership in the development consists exclusively of residential separate interests.
   • Section 5800(f)(1) provides that the scope of association duties for purposes of subdivision (a)(1) includes, but is not limited to, the decision whether to conduct an investigation of the common interest development for latent deficiencies prior to the expiration of the applicable statute of limitations, and the decision whether to commence a civil action against the builder for defects in design or construction.

   The protection is a cap rather than an immunity, and the cap is the amount of insurance carried. An association that lets the directors and officers coverage lapse does not expose the association alone; it removes the ceiling on its volunteers' personal exposure. Note also that the section protects a narrow class: subdivision (e) excludes a director who owns three or more separate interests, and subdivision (c) excludes a declarant.

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5. [5]

   California Civil Code Section 5805 (member liability protection, conditioned on the association's general liability limits)(opens the original record on California Legislative Counsel (leginfo.legislature.ca.gov))

   California Legislative Counsel (leginfo.legislature.ca.gov)Primary lawPrimaryJurisdiction CAEffective January 1, 2014Last checked September 5, 2026Updates: Amended only by legislation. Added by Stats. 2012, Ch. 180, Sec. 2 (AB 805), effective January 1, 2013, operative January 1, 2014 by Sec. 3 of Ch. 180.ID ca-civ-code-5805

   What this source supports (5)

   • Section 5805(a) states the Legislature's intent to provide civil liability protection to owners of separate interests in common interest developments that have commonly owned tenancy-in-common property, provided the association maintains specified insurance coverage for tort causes of action.
   • Section 5805(b) provides that a tort cause of action against an owner of a separate interest, brought solely by virtue of that owner's tenancy-in-common interest in the common area, shall be brought against the association and not against the individual owners, if both of the requirements in the subdivision are met.
   • Section 5805(b)(1) requires that the association maintained and had in effect one or more policies of general liability insurance covering the cause of action.
   • Section 5805(b)(2)(A) sets the required coverage at at least two million dollars ($2,000,000) where the common interest development consists of 100 or fewer separate interests.
   • Section 5805(b)(2)(B) sets the required coverage at at least three million dollars ($3,000,000) where the common interest development consists of more than 100 separate interests.

   The thresholds here are higher than the ones in section 5800 and they protect a different group. Section 5800 caps a volunteer director's personal exposure at the limits carried; section 5805 redirects a tort claim away from the individual owners entirely, and only where the association carries at least the amounts stated. Both are conditioned on insurance the association may or may not actually have, which is why the annual disclosure under section 5300 and the lapse notice under section 5810 matter to an owner rather than only to the board.

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6. [6]

   California Civil Code Section 5806 (required crime, employee dishonesty or fidelity bond coverage)(opens the original record on California Legislative Counsel (leginfo.legislature.ca.gov))

   California Legislative Counsel (leginfo.legislature.ca.gov)Primary lawPrimaryJurisdiction CAEffective January 1, 2022Last checked September 5, 2026Updates: Amended only by legislation. Last amended by Stats. 2021, Ch. 270, Sec. 3 (AB 1101), effective January 1, 2022.ID ca-civ-code-5806

   What this source supports (5)

   • Section 5806 requires that, unless the governing documents require greater coverage amounts, the association shall maintain crime insurance, employee dishonesty coverage, fidelity bond coverage, or their equivalent, for its directors, officers, and employees.
   • Section 5806 sets the required amount at an amount that is equal to or more than the combined amount of the reserves of the association and total assessments for three months.
   • Section 5806 requires that the coverage maintained by the association also include protection in an equal amount against computer fraud and funds transfer fraud.
   • Section 5806 provides that if the association uses a managing agent or management company, the association's crime insurance, employee dishonesty coverage, fidelity bond coverage, or their equivalent, shall additionally include coverage for, or otherwise be endorsed to provide coverage for, dishonest acts by that person or entity and its employees.
   • Section 5806 provides that self-insurance does not meet the requirements of the section.

   This is the one insurance requirement in the Davis-Stirling Act stated as a duty on the association rather than as a condition of somebody's liability protection. Three features are routinely missed: the amount floats with reserves and assessments rather than being a fixed figure, so it has to be revisited as reserves grow; computer fraud and funds transfer fraud must be covered in an equal amount, which a plain fidelity bond may not do; and the managing agent must be brought inside the coverage, which is where the loss most often originates.

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7. [7]

   California Civil Code Section 5810 (notice to members when a disclosed policy lapses or changes)(opens the original record on California Legislative Counsel (leginfo.legislature.ca.gov))

   California Legislative Counsel (leginfo.legislature.ca.gov)Primary lawPrimaryJurisdiction CAEffective January 1, 2014Last checked September 5, 2026Updates: Amended only by legislation. Added by Stats. 2012, Ch. 180, Sec. 2 (AB 805), effective January 1, 2013, operative January 1, 2014 by Sec. 3 of Ch. 180.ID ca-civ-code-5810

   What this source supports (3)

   • Section 5810 requires the association, as soon as reasonably practicable, to provide individual notice pursuant to Section 4040 to all members if any of the policies described in the annual budget report pursuant to Section 5300 have lapsed, been canceled, and are not immediately renewed, restored, or replaced.
   • Section 5810 requires that same individual notice if there is a significant change as to any of those policies, such as a reduction in coverage or limits or an increase in the deductible.
   • Section 5810 requires that, if the association receives any notice of nonrenewal of a policy described in the annual budget report pursuant to Section 5300, the association shall immediately notify its members if replacement coverage will not be in effect by the date the existing coverage will lapse.

   The trigger is not limited to cancellation. A reduction in limits or an increase in the deductible is a significant change and carries the same notice duty, which is the part most likely to go unreported in a hard market where a renewal is placed at lower limits rather than declined outright. The duty attaches only to policies described in the annual budget report, so what section 5300 discloses determines what section 5810 covers.

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