Glossary > Insurance > Homeowners Insurance > Condo Insurance

Loss Assessment Coverage

Loss Assessment Coverage is a type of protection that can be included in homeowners or condo insurance policies. It helps cover the policyholder for charges levied by a homeowners association for damage to common areas in a condo or housing complex due to a covered peril, such as a storm or fire.

Example #1

For instance, if a severe storm damages the community swimming pool and the homeowners association needs to assess each condo owner for the cost of repairs, Loss Assessment Coverage could help cover the individual's share of the expenses.

Example #2

In another scenario, if a fire damages the shared lobby of a condominium building, resulting in a costly repair bill that is divided among all unit owners, Loss Assessment Coverage can assist in covering the homeowner's portion of the assessment.

Misuse

A potential misuse of not having Loss Assessment Coverage could leave a condo owner financially exposed to unexpected assessments from the homeowners association. For example, if a major storm damages common areas and each condo owner is assessed thousands of dollars for repairs, a homeowner without Loss Assessment Coverage may face a significant financial burden that they were unprepared for. This underscores the importance of including this coverage in your policy to protect against such unforeseen expenses.

Benefits

One of the key benefits of Loss Assessment Coverage is that it provides financial protection to homeowners or condo owners against unexpected assessments imposed by a homeowners association. For example, if there is damage to a shared structure within the community and the association requires each homeowner to contribute to the repair costs, having Loss Assessment Coverage can help cover these unexpected expenses and prevent a financial strain on the individual.

Conclusion