First Question: Does Part 4 Even Apply to Your Association?

Part 4 applies to policies issued or renewed on or after July 1, 2011, held by a lot owner or an association, regardless of when the association was formed.

But Part 4 does not apply to your project if all three of these are true. 

1. The initial declaration for the project was recorded before January 1, 2012
2. The project includes attached dwellings
3. The declaration requires each lot owner to insure the owner's own dwelling

If your project meets all three requirements, the requirements below are not imposed by statute, and your insurance arrangement is whatever the declaration says. An exempt association may opt in by amending the declaration, but during the period of administrative control, such an amendment requires the declarant's consent. 

Part 4 also does not apply, unless the declaration provides otherwise, to a project whose lots are all restricted to entirely nonresidential use. 

What the Association Must Carry

Assuming Part 4 applies, then beginning no later than the day the first lot is conveyed to someone other than a declarant, the association shall maintain, to the extent reasonably available, two policies. 

1. Blanket property insurance or guaranteed replacement cost insurance on the physical structure of all attached dwellings, limited common areas appurtenant to a dwelling on a lot, and the common areas, against all risks of direct physical loss commonly insured against.
2. Liability insurance covering occurrences commonly insured against for death, bodily injury, and property damage arising out of or in connection with the use, ownership, or maintenance of the common areas. 

Read that first item closely. The requirement runs to attached dwellings, and Section 57-8a-405(4) confirms the consequence: unless the declaration provides otherwise, an association is not required to obtain property insurance for a loss to a dwelling that is not physically attached to another dwelling or to a common area structure.

If you own a detached home in a community association, do not assume the association's policy covers your house. It may cover only the common areas. Read the declaration and confirm what your own policy covers.

"Reasonably available" means available through typical carriers and markets, regardless of the association's ability to pay; cost alone does not make coverage unavailable. If the association learns that either policy is not reasonably available, it must notify all lot owners within seven calendar days. 

How Much, and What Must Be Included

Coverage may not be less than 100% of the full replacement cost of the insured property, measured at the time of purchase and at each renewal.

Where coverage does apply, your finishes and upgrades are included. Property insurance shall cover any fixture, improvement, or betterment installed at any time to an attached dwelling or an appurtenant limited common area, whether installed in original construction or a later remodel, including floor covering, cabinets, light and electrical fixtures, heating or plumbing fixtures, paint, wall covering, and windows. 

The Deductible, and Why It Lands on You

Each lot owner is an insured person under the association's property policy. 

When a loss is covered by both the association's policy and your own, the association's policy provides primary coverage, but you are responsible for the association's deductible, and the building property coverage of your own policy, often called coverage A, applies to that portion of the loss. 

Your share is proportional. It is calculated by applying the lot damage percentage, the share of the total covered loss attributable to damage to your lot, the dwelling on it, or its appurtenant limited common area, to the deductible amount. If you do not pay within 30 days after substantial completion of the repairs, the association may levy an assessment for it. 

A notice failure moves that liability back to the association. The association must notify each owner under Section 57-8a-214 of this deductible obligation and any change to it. One that fails to do so is responsible for the portion it could otherwise have assessed to you, to the extent you have no coverage that applies. If it provided notice of the deductible but not a later increase, it is responsible only for that unnoticed increase. If you were never told the deductible, say so before paying an assessment for it.

The association must also set aside an amount equal to its deductible, or at least $10,000 if the deductible exceeds that. 

Small Losses: Your Policy Goes First

If the board determines, under the business judgment rule, that a covered loss will likely not exceed the association's deductible, then until it becomes apparent otherwise, your policy is treated as primary for damage to your lot, the association stays responsible for common area loss, and it need not tender the claim to its insurer. 

An owner with no policy is responsible for the lot damage, and the association may recover its costs to remediate the lot through an assessment. Combined with the detached-dwelling gap above, this is the practical case for carrying your own policy. These policies are generally identified with your personal insurance carrier as a “Coverage A” or “HO6” policy.

Protections That Cannot Be Written Around

Your act or omission cannot void the association's policy. Unless you are acting within the scope of your authority on behalf of the association, a lot owner's act or omission may not void the property or liability policy, and may not be a condition to recovery under it.

The insurer waives subrogation against you. An insurer under a policy obtained by the association waives its right to subrogation against the lot owner and any person residing with the owner if the owner resides on the lot.

Governing documents cannot override this part. A policy issued to the association may not be inconsistent with Part 4, and a provision of a governing document contrary to it has no effect. Note that this is broader than the exemption above: once Part 4 applies, your documents cannot contradict it.

You always keep the right to insure yourself. Neither the governing documents nor the association's policy may prevent a lot owner from obtaining insurance for the owner's own benefit. 

The declaration or bylaws may require additional insurance, and the board may obtain more than the minimum. 

Where the Proceeds Go

Proceeds are payable to an insurance trustee the association designates or, if none is designated, to the association, and may not be payable to a holder of a security interest. They are held in trust for the association, the lot owners, and lien holders. If damaged property is to be repaired, proceeds go first to that repair, with any surplus distributed as the declaration provides.

You may request a certificate or memorandum of insurance, and the insurer must issue one. Cancellation or nonrenewal follows Section 31A-21-303. A board that buys the required coverage is not liable if the proceeds prove insufficient to cover full replacement cost at the time of loss. 

Rebuilding After a Disaster: The Duty To Repair, and the 75% Vote

If a portion of the project for which insurance is required under Part 4 is damaged or destroyed, the association shall repair or replace it within a reasonable amount of time, unless one of three things is true.

1. The project is terminated
2. Repair or replacement would be illegal under a state statute or local health or safety ordinance
3. At least 75% of the allocated voting interests vote not to rebuild, and each owner of a dwelling and appurtenant limited common area that will not be rebuilt also votes not to rebuild

That third condition has two halves. A 75% supermajority alone is not enough. The owner of the specific home that would not be rebuilt must also vote against rebuilding it, which means a supermajority cannot vote to abandon one owner's dwelling over that owner's objection.

Shortfalls are a common expense. The cost of repairing or replacing a lot beyond insurance proceeds and reserves is a common expense to the extent the association is required to insure that lot, and the cost for any common area beyond proceeds and reserves is a common expense outright. The qualifier on the first half matters if your dwelling is detached and therefore outside the required coverage.

If the entire project is destroyed and not rebuilt, the association restores the damaged common areas to a condition compatible with the rest of the project and distributes the proceeds to the affected owners and lienholders, with the remainder going to all owners in proportion to their common expense liabilities. 

If owners vote not to rebuild a lot, that lot's allocated interests are automatically reallocated as if the lot had been condemned, and the association must record an amendment to the declaration reflecting it. 

Three Things To Check Before a Claim

1. Whether Part 4 applies to your association at all. Pre-2012 declaration, attached dwellings, and an owner-insures-own-dwelling requirement together take your project outside it
2. Whether your dwelling is attached or detached. A detached dwelling may fall outside the association's required property coverage entirely
3. The association's deductible, and whether you were ever notified of it or of an increase. That notice decides whether the deductible share is yours or the association's

Reviewed against the Utah Code, current as of September 9, 2026.