If you live in a homeowner or condo association, Loss Assessment Coverage is probably one of the most important parts of your home or condo insurance policy… yet it is probably the most misunderstood and overlooked parts.
Every association has Common Areas. This can include things like hallways, elevators, stairwells, parking lots, community buildings, swimming pools, tennis courts, basketball courts, etc. Who owns these Common Areas? You do… along with the other members of the association. You each share equal parts ownership. But what most people don’t think about is that you also share equal parts responsibility for any liabilities associated with these Common Areas.
For example, what if a child drowned in the community swimming pool and the distraught parents sue the association for wrongful death? If the jury awards the parents $5,000,000 and the association only carries $2,000,000 insurance coverage… where will the other $3,000,000 come from? You… along with the other members of the association! You would each be assessed an equal part. So if you live in a 100 unit complex you could expect an assessment of approximately $30,000 ($3,000,000 divided by 100 owners = $30,000).
The Loss Assessment Coverage in your home or condo insurance policy is there to provide protection for this type of special assessment. But most home or condo insurance policies include a only very limited amount of Loss Assessment Coverage… typically $1,000 – $5,000. But you have the option to purchase additional Loss Assessment Coverage. Most insurance companies offer limits up to $50,000… although there are companies that will offer more.
The cost to purchase additional Loss Assessment Coverage is typically very minimal. So if you live in a homeowner or condo association I always recommend purchasing the highest amount of Loss Assessment Coverage your insurance company offers.
Insurance Blog - By Jennifer Wells, CISR 