Loss assessment insurance can cover deductible assessments when the association requires condo owners to pay a portion of the master policy’s deductible to help cover a claim. This coverage covers damage assessments in common areas like pools or gyms. This is where the association’s master policy doesn’t fully cover repair costs.
The tool aids in liability assessments in case of an injury in a common area. This allows condo owners to bear some of the costs. Loss assessment coverage may not be required, but it can provide protection for condo owners against unexpected costs from special assessments filed by the homeowners association.
The amount of coverage needed will depend on the association’s master policy limits and deductibles. Homeowner and condo association’s master policy provides insurance for buildings and common areas, but most times, it may not always be enough to cover all the costs. Loss assessment coverage fills gaps in condo insurance, ensuring owners don’t have to pay a large sum in case of a claim.
How Does Loss Assessment Insurance Work?
Homeowners and condo insurance policies offer up to $1,000 in loss assessment coverage to cover deductibles or claims exceeding the master policy’s limits. You can increase your loss assessment coverage by $10,000 to $100,000 by endorsement to your homeowners or condo policy. For instance, if a hurricane causes significant structural damage to a condo building, the remaining amount may be divided among condo owners as a loss assessment.
Without loss assessment coverage, you would be responsible for covering these costs personally. Loss assessments can arise unexpectedly and prove to be financially burdensome. It’s important to note that a condo association’s master policy differs from your condo insurance policy. The condo policy safeguards the contents of your unit, while the master policy covers the building and common areas.
What does it cover?
Loss assessment insurance covers damages and losses exceeding a master policy’s limits, which condo owners may be billed for. This type of insurance can be particularly beneficial in several scenarios, including:
- Liability claims are caused by incidents that occur in shared areas, such as courtyards.
- Property damage to common areas, like hallways or the building’s roof.
- Medical expenses related to injuries caused in common areas that the association is liable for.
These types of coverage can provide a valuable safety net, making sure that condo owners are not left to shoulder the full cost of damages or liabilities that exceed the master policy’s limits.
Who needs loss assessment coverage?
Loss assessment coverage can be a prudent choice for a homeowner or condo owner who is part of an association and may not have the financial means to cover their share of a costly master policy claim. Condo owner association master policies often come with deductibles and coverage limits. The condo association’s bylaws impose additional costs on owners if the coverage is insufficient to cover damage or injury claims.
These uncovered expenses are then divided among all condo owners as a loss assessment. Commonly, master policy deductibles can range from $5,000 to $50,000. Having your loss assessment policy can provide a valuable safeguard. The policy may have a deductible, but it may be less burdensome than carrying out a loss assessment yourself.
Costs of loss assessment insurance
A loss assessment coverage endorsement on a condo insurance policy may cost as little as $10 to $25 per year for $100,000 coverage, according to an industry expert. The cost of loss assessment insurance will be in addition to your condo or homeowners insurance bill.
The average cost for condo insurance is $445 a year for a policy with $100,000 in personal property coverage, $300,000 for liability coverage, and a $1,000 deductible, based on an analysis by a financial publication. The exact cost can vary depending on the insurance company, your location, claims history, and the amount of coverage needed.
Tips for buying loss assessment coverage
Here are tips for buying loss assessment coverage, to help you protect yourself against costly loss assessment.
- -Review your association’s bylaws to understand the provisions regarding the loss assessments.
- -Get familiar with your association’s master policy to understand the coverage limits and deductibles. Make sure the association is paying its premiums on time.
- Carefully review your policy to see if the amount of loss assessment coverage provided, is enough for your needs.
- Ensure common areas like swimming pools are monitored for potential future assessments and consult your insurance agent about coverage exclusions.
By following these tips, you’d get a better loss assessment to protect yourself and your finances in case of unexpected expenses arising from damages or injuries in your shared living space.