Loss Assessment Coverage

Loss assessment coverage is added protection if damage to your condo exceeds your HOA insurance policy limits. Loss assessment coverage is already built-in to your condo insurance policy, with a coverage limit of up to $1,000.

What is Loss Assessment Coverage?

Loss assessment coverage protects you in the case you’re asked to pay out of pocket. 

In what situations would you have to pay out of pocket? (we hear you ask). 

  1. Let’s say your HOA needs to file a claim, residents will need to split the deductible equally. As a reminder, an insurance deductible is an amount of money they choose when purchasing a policy, that will be subtracted from any future claims payouts. Deductibles for HOA insurance tend to start at around $10,000 but can go as high as $50,000.
    Btw- some condo insurance policies do cover HOA deductibles so should check your HO6 policy to see if it’s covered.
  2. Condo owners pay monthly payments to a Homeowners Association (HOA). These payments cover things like security to the maintenance of shared spaces and HOA insurance. If your building or shared spaces are damaged, your HOA will cover costs up to its coverage limits. Any costs beyond those limits will be split equally among condo residents. This is called a loss assessment.  

Let’s say a visitor was seriously injured in the condo pool and sues the HOA for $2,500,000. Since every condo owner technically owns a part of the pool, they’re also responsible for damages. If the HOA master policy has $1,000,000 in liability coverage, the remaining $1,500,000 is the responsibility of the condo owners. With 100 condo owners on the development, each owner will owe $15,000, which they’d have to pay out-of-pocket unless they have insurance in place. 

What is covered by loss assessment coverage?

Your loss assessment coverage will cover you for the same damages as your regular condo insurance, aka an HO6 policy. These damages, also known as named perils are 16 bad things that could happen to your home structure, personal property, and liability damages. These perils include:

  • Fire or lightning
  • Windstorm or hail
  • Explosion
  • Riots
  • Aircraft
  • Vehicles
  • Smoke
  • Vandalism
  • Theft
  • Falling objects
  • Weight of ice, snow, or sleet
  • Accidental discharge or overflow of water or steam
  • Sudden and accidental tearing, cracking, burning, or bulging
  • Freezing
  • Sudden and accidental damage due to short-circuiting
  • Volcanic Eruption

How much loss assessment coverage do I need?

Usually, loss assessment coverage is already built-in to your condo insurance policy, with a coverage limit of up to $1,000. In most states, you’ll have an option to increase that coverage amount with an ‘add-on.’ 

How much loss assessment coverage you need depends on the potential dangers on your condo development. You should also take a closer look at your HOA master policy. This will shed light on what the HOA is responsible for versus what you’re responsible for, how high their coverage limits go, and whether they have special deductibles for certain hazards.  Add-ons policy limits tend to range between $10,000 up to $100,000. 

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