How Loss Assessment Coverage Works
Why Would an HOA Assess Individual Unit Owners?
Condominium owners share certain financial responsibilities through the association. After a significant loss, the association may sometimes charge individual unit owners for part of an expense that is not fully absorbed by the association.
Master Policy Deductible
The association’s property policy may have a deductible that must be paid before its coverage applies. Depending on the governing documents and circumstances, some or all of that cost may be assessed to unit owners.
Association Property Loss
Damage involving roofs, exterior walls, common areas, shared structures, or other association property may create expenses that affect the entire condominium community.
Liability Assessment
Certain liability claims involving the association may also result in assessments to owners when costs exceed available association resources or insurance, subject to the circumstances.
When May Loss Assessment Coverage Help?
Loss assessment coverage is generally not a blanket promise to pay every charge from your HOA. The assessment usually must result from a qualifying type of loss that fits within the terms of your condo policy.
The event behind the assessment may need to qualify under the applicable provisions of your individual condo policy.
Documentation from the association explaining the assessment, amount, and reason may be important when a claim is reviewed.
Any available loss assessment payment is subject to the limit shown on your policy and any applicable sublimits.
Deductibles, exclusions, special assessment provisions, covered causes of loss, and other policy terms may affect the outcome.
Why Your Loss Assessment Limit Matters
Condominium associations can have substantial property values and large master-policy deductibles. Reviewing your HO-6 loss assessment limit can help you understand how much protection may be available if a qualifying assessment occurs.
Ask about the association’s property deductible and whether special deductibles apply to certain types of losses.
Check the loss assessment limit shown on your HO-6 declarations and whether optional higher limits are available.
Review bylaws and governing documents for information about how association losses and deductibles may be allocated among owners.
Some policies may apply different limits or restrictions depending on the type of assessment or cause of loss.
Have You Reviewed Your Loss Assessment Limit?
Best Formula Insurance can help you review condominium insurance options, loss assessment coverage, building additions and alterations, personal property, liability limits, deductibles, and other available protection.