What is Loss Assessment Coverage?

Submitted by BlockInsurance on Wed, 10/23/2019 - 18:15

Loss assessment coverage is insurance coverage for condo owners. This coverage provides protection for situations when you as an owner of shared property, like a condominium or co-op, are held financially responsible for a portion of the costs for deductibles or damage to the building. 

Still a little confused? Here are some examples!

EXAMPLE 1: There's been major weather damage to the outside of the building.

Let's say hail or wind strip away major parts of the building, leaving $550,000 in needed repairs. Problem is, your HOA master policy only carries $500,000 in property damage coverage. In which case, the HOA might assess the extra $50,000 to the condo owners. 

For the sake of easy math, let's say you are in a 50-unit building, that's $1,000 you have to cough up. Loss assessment coverage can usually cover that cost for you, helping make sure untimely damage doesn't put an unexpected strain on your personal finances. 


EXAMPLE 2: Shared property inside the building has been damaged.

At times, living in a condo probably feels similar to living in an apartment. One big difference, though is that in an apartment building, the shared and structural items of the building (usually) belong to a landlord or management company. In a condo, on the other hand, you and your fellow residents jointly own the property yourselves.

So, if a fire, explosion or other covered loss damages the elevators, lobby, carpeting, inner walls, etc., you might be asked to shoulder part of the load in repairing them if the cost goes beyond the HOA master policy limits. 

Loss assessment coverage helps you keep the building running and make the fixes you and your neighbors can't do without. 


Now for the big question - how much loss assessment coverage do I need?

When deciding how much condo loss assessment coverage to get, you should first take a close 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. 

As a general guideline, it's best to get as much loss assessment protection as you can comfortably afford for the greatest peace of mind against unpredictable mishaps. 


Condo owners this is for you. If you have any other questions, give us a call!

Block Insurance // 870 236 8744