SB 432

SB 432 is a California law that updated insurance and disclosure requirements for common interest developments governed by the Davis-Stirling Act. The law strengthened the obligations of HOA boards to maintain adequate insurance coverage and to provide transparent information about that coverage to all members. Under SB 432, associations must maintain certain minimum levels of property and liability insurance, including coverage for common area structures, general liability, and fidelity or crime insurance to protect against theft or embezzlement of association funds. The law also requires associations to disclose their insurance policies to members as part of the annual budget report distributed under Civil Code Section 5300. This disclosure must include the name of the insurer, the type of coverage, the policy limits, and the amount of any deductible. If the association's deductible exceeds $10,000, the board must disclose how it intends to fund the deductible in the event of a claim — whether from reserves, a special assessment, or a combination. SB 432 also addresses the allocation of insurance responsibilities between the association and individual unit owners, clarifying which party is responsible for insuring which components of the property. Board members should review their governing documents alongside SB 432 to ensure their insurance program meets both the statutory minimums and any additional requirements in the CC&Rs. Individual owners should be advised to carry their own HO-6 or similar policy to cover unit interiors, personal property, personal liability, and loss assessment coverage for their share of any association insurance deductible.