The New HOA Board Member's Guide to Insurance in Tennessee

Why insurance is part of your job

Congratulations on joining the board. You now share responsibility for protecting your neighbors' biggest investment and the money they pay in dues.

Board members owe the association a duty to act in its best interest. Making sure the HOA is properly insured is one of the clearest ways to meet that duty. When a tree falls on the clubhouse, a guest slips at the pool, or money goes missing, the right policies decide whether the HOA recovers or homeowners face a special assessment.

You don't need to become an insurance expert. You do need to know:

• What policies the HOA carries today
• What your governing documents require it to carry
• What Tennessee law requires
• When each policy renews
• Who to call when something goes wrong

The core HOA policies at a glance

Each coverage explained

Property insurance (the master policy)

The master policy insures buildings and structures the association owns. Think clubhouses, pool houses, entry monuments, gazebos, fences, mailbox kiosks, and in condos, the buildings themselves.

What to check:

• Valuation: replacement cost pays to rebuild at today's prices. Actual cash value subtracts depreciation. Replacement cost is usually the better choice.
• Limit: based on a current replacement cost estimate, not market value or what you paid
• Deductible: know whether it is a flat amount or a percentage for wind and hail. Your reserves should be able to absorb it.
• Coinsurance: if the policy has a coinsurance clause and you underinsure, claim payments can be reduced
• Ordinance or law: pays for code upgrades when an older building is rebuilt

General liability (GL)

GL pays when someone is hurt or their property is damaged on common areas and the HOA is blamed. Pools, playgrounds, walking trails, ponds, and clubhouses all create exposure. GL also covers the HOA's legal defense.

What to check:

• Per-occurrence and aggregate limits, often $1 million / $2 million
• Board members and volunteers listed as insureds
• Exclusions for pools, diving boards, playgrounds, or animals
• Whether events like a neighborhood July 4th party are covered

Directors and Officers (D&O)

D&O protects you personally. Homeowners can and do sue board members over fines, architectural decisions, assessments, elections, and contracts. D&O pays defense costs and settlements.

What to check:

• Covers current, past, and future board members, committee members, and volunteers
• Includes the property manager as an insured, if you use one
• Covers non-monetary claims, such as a lawsuit asking the board to reverse a decision
• Whether it includes employment practices coverage for claims by employees
• Whether it is written on a claims-made basis, and what that means for prior acts

Crime and fidelity coverage

This coverage reimburses the HOA when someone steals its money. Under Public Chapter 731, every Tennessee HOA that collects assessments must carry a blanket fidelity bond starting January 1, 2027.

The law requires:

• A limit equal to reserves plus one-fourth of annual assessment income, minimum $10,000
• Coverage for officers, directors, association employees, the managing agent, and the managing agent's employees

For the full breakdown, see our posts on the new law and the bond calculator.

Umbrella (excess liability)

An umbrella adds limits on top of GL and other liability policies. One serious injury claim can exceed a $1 million GL limit. Umbrellas are an affordable way to protect the association and its members from that gap.

What to check: which underlying policies the umbrella sits over, and whether D&O is included.

Workers' compensation

If the HOA directly employs anyone, such as a pool attendant or groundskeeper, you need to know your workers' comp obligations. Tennessee generally requires coverage for employers with five or more employees, with stricter rules in construction. Many HOAs avoid direct employees by using a management company or contractors. Always collect certificates of insurance from vendors.

Cyber

HOAs collect names, addresses, emails, and sometimes bank details for autopay. Cyber insurance helps pay for breach notifications, credit monitoring, and recovery from ransomware or email fraud. It's a fast-growing need for associations that use online portals.

Flood and earthquake

Standard property policies exclude flood and earthquake. If any common-area building sits near a creek, pond, or in a FEMA flood zone, ask about flood coverage. West Tennessee communities near the New Madrid fault zone should also ask about earthquake.

What the HOA covers vs. what homeowners cover

One of the most common questions new board members get is, "Isn't the HOA supposed to cover that?" The answer depends on your community type and your governing documents.

Condo boards should read the declaration closely. It defines the line between what the association insures and what owners insure. Sharing that line with owners each year prevents surprises after a claim.

Remind owners to carry loss assessment coverage on their own policies. It helps pay their share if the HOA levies a special assessment after an uninsured or underinsured loss.

Your first 90 days: an insurance checklist

Days 1 to 30: gather

• Get copies of every current policy and declarations page
• Read the insurance section of your declaration, bylaws, and CC&Rs
• List each policy, carrier, limit, deductible, and renewal date in one place
• Find out who your insurance agent is and how to report a claim
• Ask for the last five years of claims history (loss runs)

Days 31 to 60: compare

• Compare what you carry to what your governing documents require
• Run the Public Chapter 731 fidelity bond formula and compare it to your crime limit
• Confirm D&O covers you, past board members, committees, and volunteers
• Confirm your property manager is covered under crime and D&O
• Check when the property replacement cost values were last updated
• Collect certificates of insurance from every vendor and contractor

Days 61 to 90: act

• Meet with your agent to review gaps and options
• Present findings and recommendations to the full board
• Close any gap in fidelity coverage before January 1, 2027
• Add insurance premiums and deductibles to next year's budget
• Put every renewal date on the board calendar with a 60-day reminder
• Share a one-page "what the HOA covers vs. what you cover" summary with owners

Questions to ask your insurance agent

Bring these to your first review meeting:

1. Are our buildings insured at full replacement cost, and when was the valuation last updated?
2. What is our wind and hail deductible, and can our reserves cover it?
3. Does our crime or fidelity coverage meet the Public Chapter 731 formula?
4. Are volunteer officers and our management company covered under crime and D&O?
5. Is our D&O claims-made? What happens to coverage when board members change?
6. Does our D&O include employment practices coverage?
7. Do we have an umbrella, and which policies does it sit over?
8. Are our pool, playground, and lake or pond covered without exclusions?
9. Do we need flood, earthquake, or cyber coverage?
10. What should we require in vendor contracts and certificates of insurance?
11. How do we report a claim, and how fast?
12. When should we start the renewal process each year?

Glossary of HOA insurance terms

Frequently asked questions

Am I personally liable as an HOA board member?

You can be named in a lawsuit. D&O insurance is designed to defend you and pay covered claims, which is why every board should carry it.

What is the most important policy for a new HOA board?

There isn't just one. GL, D&O, and crime coverage are the baseline. In Tennessee, crime or fidelity coverage becomes legally required on January 1, 2027.

Does the HOA's insurance cover my house?

In a single-family HOA, usually not. Your own homeowners policy covers your home. In a condo, the master policy often covers the building, while your HO-6 covers the interior and your belongings. Check your declaration.

How often should the board review insurance?

Every year, at least 60 days before renewal. Also review after adding amenities, raising dues, or growing reserves.

Who should the board work with on insurance?

An independent agent who writes community associations can compare multiple carriers and explain how coverages fit together.

What happens if our HOA doesn't get a fidelity bond by 2027?

The association would be out of compliance with state law and exposed to uninsured theft losses. Talk with your agent and association attorney now.

Get a free HOA compliance check

New to the board and not sure where to start? Send us your current policies. Hutsenpiller Insurance will review your coverage, check it against Tennessee's new fidelity bond law, and give you a plain-English summary of any gaps, free.

Serving Middle Tennessee since 1992.

This guide is general information, not legal advice. Coverage depends on your actual policy forms and governing documents.

Sources

• Tennessee General Assembly: HB2338 bill text
• BillTrack50: TN HB2338
• Insurance Business Magazine: New Tennessee laws mandate fidelity bonds for HOAs