Kentucky HOA and condo insurance, where the condo statute sets a 100 percent floor on the wrong valuation basis. One hundred percent of actual cash value still sits below the lender replacement-cost bar

The Kentucky Condominium Act, at KRS 381.9187, requires the association to maintain property insurance on the common elements against fire and extended-coverage perils, in a total amount, after deductibles, of not less than 100 percent of the actual cash value of the insured property at purchase and at each renewal, exclusive of land, excavations, and items normally excluded from property policies, plus liability insurance including medical payments in an amount set by the executive board and the declaration. The Act, KRS 381.9101 to 381.9207, was modeled on the Uniform Condominium Act and applies to condominiums created on or after January 1, 2011.

The practitioner point is the valuation basis, not the percentage. One hundred percent sounds complete, but actual cash value is replacement cost less depreciation, so a fully compliant Kentucky master policy can pay a depreciated loss and still fall below the Fannie Mae Selling Guide (section B7-3) 100 percent replacement-cost standard a conventional loan requires. A Kentucky condominium can satisfy KRS 381.9187 and still fail a lender insurance review, so the program should be written on replacement cost and sized to the lender bar, not to the statutory actual-cash-value floor.

Condominium regimes created before January 1, 2011 generally remain under Kentucky's older Horizontal Property Law, KRS 381.805 to 381.910, unless the association has opted into the newer Act, and Kentucky has no comprehensive planned-community or homeowners-association statute. For most non-condominium HOAs, then, the insurance obligation is set by the declaration and the lender rather than by a state property-insurance floor, so confirm which regime governs before reading the requirement.