What Is Loss Assessment Coverage?
Loss assessment coverage is an optional endorsement that you can add onto your homeowners insurance
or condo insurance
policy. It helps protect you if you live in a shared community, like a condo or homeowners association (HOA), where you’re responsible for a portion of damage or loss in a common area.
How Does Homeowners Insurance Loss Assessment Coverage Work?
Members of homeowners or condominium associations pay fees for certain services or amenities in the shared community. These fees go toward a community HOA insurance policy, often referred to as a “master policy.”
A master policy helps cover losses in common areas, up to coverage limits. If the claim cannot be fully covered by the master policy, HOA members may need to pay a share of the remaining amount. Members may also have to pay if there’s no coverage by the homeowner or condo association’s insurance for a specific loss.
Most condo or homeowners policies give you $1,000 of coverage towards the master policy limit or the deductible for a covered loss. For extra protection, you can get a home insurance endorsement
that’s just for loss assessment coverage.
What Does a Loss Assessment Cover?
If you’re a property owner in a shared community, a loss assessment can help pay for:
You can count on this endorsement to help pay for these, if damages to shared areas exceed your HOA’s master policy limits.
Keep in mind that loss assessment coverage doesn’t help pay for property improvements like re-paving roads or putting a new roof on a club house.
Damage to the Building
If a storm tears shingles off your building’s roof, unit owners may need to help pay for repairs if the HOA master policy is not enough.
Damage to Shared Property
If a fire damages shared areas in your condo’s building, like elevators or the lobby, and they exceed the HOA master policy’s limit, you may need to help pay for repairs. You also may have to help pay your HOA’s master policy deductibles if damages impact all members equally. In situations like this, your portion of the deductible amount will be split with other home or condo owners in the HOA. If a fire destroys a shared area of your condo’s complex, like the lobby, loss assessment coverage can help pay damages that exceed the master policy deductible.
Injury in a Shared Area
Visitors come in and out of your HOA common areas all the time. But what happens if someone sprains their ankle in the pool? Your HOA liability insurance will help cover the cost of the claim.
However, if the injured person’s medical treatment expenses exceed your HOA liability limit, then you’ll likely have to help cover the costs that remain. This is where loss assessment coverage protects you.
How Much Loss Assessment Coverage Do I Need?
As you review your condo or homeowners association’s requirements, you’ll also want to look at its master policy limits. This can help you figure out how much extra coverage to get so you can avoid paying out of pocket if damages exceed the master policy coverage amount.
Get a Quote for Home Insurance Loss Assessment Coverage