Pennsylvania Condo Insurance: Association Rules, Deductibles
A Pennsylvania condominium association must maintain property coverage on common elements and units of at least 80 percent of actual cash value after deductibles. When a covered claim occurs, the executive board levies the unpaid deductible portion according to state law. At The HOA Guide, we walk board members and unit owners through state-specific property mandates so governance stays clear.
What Pennsylvania Law Requires the Association to Insure
Pennsylvania’s Uniform Condominium Act sets specific mandatory insurance coverages for every condominium community. Under 68 Pa.C.S. § 3312, the association must maintain property insurance on the common elements and units. This coverage excludes improvements and betterments installed in units by individual owners.
The property policy must insure against all risks of direct physical loss commonly insured against. Conversion buildings follow a distinct standard. For a conversion building, the statute permits coverage limited to fire and extended coverage perils instead.
Section 3312 also requires comprehensive general liability insurance, including medical payments coverage. The executive board determines the liability coverage amount. That amount cannot fall below any specific figure designated in the condominium’s declaration. To understand how general association insurance operates, review our guide to condo master policy coverage.
The 80 Percent Actual-Cash-Value Floor After Deductibles
State law establishes a minimum statutory baseline for property policy limits rather than requiring full replacement value. The total amount of insurance after application of any deductibles must be not less than 80 percent of the actual cash value of the insured property. This valuation excludes land, excavations, foundations, and other items normally excluded from property policies.
| Valuation Basis | Statutory Requirement under § 3312 | Claim Payout Basis |
|---|---|---|
| Actual Cash Value (ACV) | Minimum statutory floor of 80% after deductibles | Accounts for depreciation of damaged items |
| Full Replacement Cost | Not mandated by § 3312; requires declaration language | Pays to restore items without depreciation deduction |
Actual cash value accounts for physical depreciation. An actual-cash-value settlement formula reduces the insurance proceeds for age, wear, and tear. That reduction changes your claim math. If an association insures only to the statutory 80 percent actual-cash-value minimum, a major loss can leave an association with less money than needed to rebuild modern building components. Communities often examine national insurance providers to find master coverage structures that fit their specific property profile.
Who Covers the Deductible After a Loss
The executive board levies the portion of a loss not covered because of a policy deductible in accordance with section 3314(c). The master policy does not absorb the entire financial burden when a deductible applies.
Unit owners retain the right to protect their own financial interests under the statute. Section 3312 provides that a unit owner may insure his or her unit for all losses to the unit. This right includes losses not covered by the association’s insurance because of a deductible provision or otherwise.
Owners can address potential deductible levies by securing personal property coverage. Many owners select loss assessment coverage within their individual policies. An individual HO-6 insurance policy can step in when an association levies a deductible. Knowing the boundary between policies is critical, as detailed in our review of master policy coverage vs. homeowners insurance.
What the Master Policy Gives Individual Owners
Section 3312 grants individual condominium owners specific protections under the association’s master policy. Each unit owner is an insured person under the policy for liability arising out of ownership of an undivided interest in the common elements.
The law restricts insurer actions against residents. The insurer waives its right of subrogation against any unit owner or members of the owner’s household. The insurance carrier cannot seek recovery from a resident after paying a covered claim.
Priority rules protect owners who maintain personal insurance. If a unit owner has other insurance on the same property, the association’s policy is primary and does not contribute with it. The master policy pays first.
Where Insurance Proceeds Go After a Covered Loss
Insurance proceeds cannot be disbursed freely without statutory restrictions. Under § 3312, the insurance trustee or the association holds insurance proceeds in trust for unit owners and lienholders as their interests may appear.
Proceeds go first to repair of the damaged common elements. Unit owners receive payment only if a surplus remains after restoration. Rebuilding is not required if the condominium is terminated, or if eighty percent of the unit owners, including every owner of a unit or assigned limited common element that will not be rebuilt, vote not to rebuild.
The Regulator: Pennsylvania Insurance Department
The Pennsylvania Insurance Department serves as the state’s insurance regulator. It monitors carrier operations and enforces state insurance standards.
Owners and board members can use state resources for education and dispute resolution. The department’s consumer help center publishes homeowners-insurance information and takes complaints and questions regarding carrier practices. For governance and statutory guidelines outside insurance, consult our guide to Pennsylvania HOA laws.
Who This Guidance Does Not Fit
This guidance does not apply to single-family homeowners associations that are not condominiums. Planned communities without unit ownership in shared structures follow different rules. It also does not fit conversion buildings in the same manner, because 68 Pa.C.S. § 3312 allows conversion buildings to carry fire and extended coverage perils rather than broad all-risk property coverage.
What Would Change This Guidance
Legislative action would alter these rules. Statutory amendments to 68 Pa.C.S. § 3312 or section 3314 by the General Assembly would revise master policy standards statewide. Stricter provisions adopted in your specific condominium declaration would also supersede statutory floors with higher minimum insurance requirements.
Professional Consultation and Legal Notice
Review policy terms carefully before renewal. If your community needs to review its property program, read our foundational guide on what HOA insurance covers to evaluate your coverage limits.
This is educational information, not insurance or legal advice. A board should confirm its coverage against 68 Pa.C.S. § 3312 with a licensed Pennsylvania insurance broker experienced in condo/HOA master policies, and consult a Pennsylvania community-association attorney for its specific situation.
Frequently asked questions
What insurance does Pennsylvania law require a condo association to carry?
Under 68 Pa.C.S. § 3312, a condo association must carry property insurance on common elements and units, exclusive of improvements and betterments installed in units, against all risks of direct physical loss, or against fire and extended coverage perils for conversion buildings. The association must also carry comprehensive general liability insurance, including medical payments, in an amount determined by the board but not less than any amount in the declaration.
Does the Pennsylvania master policy have to cover the full value of the building?
No, the statute sets an 80 percent actual-cash-value minimum floor rather than mandating full replacement cost. The total amount of insurance after application of any deductibles must not be less than 80% of the actual cash value of the insured property, excluding land, excavations, foundations, and items normally excluded from property policies.
Who pays the deductible after a covered loss at a Pennsylvania condo?
Under § 3312, the portion of a loss or claim not covered because of a deductible is levied by the executive board in accordance with section 3314(c). A unit owner may also insure his or her unit for all losses to the unit, including losses not covered by the association's policy because of a deductible provision.
Am I protected as a unit owner under the association's Pennsylvania policy?
Yes, each unit owner is an insured person under the policy for liability arising out of ownership of an undivided interest in the common elements. The insurer waives its right of subrogation against any unit owner or household member, and the association's policy is primary if an owner holds other insurance on the same property.
Where do insurance proceeds go after a covered loss to a Pennsylvania condo building?
Insurance proceeds are held in trust by the insurance trustee or association for unit owners and lienholders as their interests appear. Proceeds go first to repair the damaged common elements, and unit owners receive payment only if a surplus remains after restoration, unless the condominium is terminated or 80 percent of unit owners vote not to rebuild.
This guide is general information, not legal or financial advice. Your association's governing documents and your state's statute control — confirm specifics with a licensed professional.