We often will field a question from customers that is so good that we feel it is necessary to write about it and publicly share the answer. This question is one we hear quite often, and the short answer is if you live in a condo and additional Loss Assessment coverage is available from your insurance company – buy it!
Generally speaking, most condo policies will offer some level of Loss Assessment coverage but the coverage is typically capped at $1000-$2000 per occurrence. Many insurance carriers will allow the customer to increase this limit of coverage up to $10,000 or more for a slight increase in annual premium.
What is Loss Assessment Coverage?
This coverage is easiest to explain using a real-life example. In 2017, Brevard County was hit by Hurricane Irma. Many of the condos on the beaches in Brevard County sustained damage to the common areas and to the common structures of the condo development. Condo associations generally have a master insurance policy to cover the damages in situations such as these, but these policies typically have deductibles that can put a huge dent into the Condo Associations reserve account. The condo association will generally replenish their reserve account by charging the unit owner a special assessment called a loss assessment. And this is where loss assessment coverage come into play. The unit owner should forward the loss assessment notice from their condo association to their insurance company for consideration of reimbursement.
So back to the originally question – do you need loss assessment coverage – the answer is yes! Unit owners need to understand that loss assessments not only can be assessed to cover deductibles but can also be assessed when the master policy’s coverage is exhausted and fails to cover all the damages after a direct loss. In short, for a nominal fee, the unit owner can help mitigate their potential out of pocket expenses due to loss assessments by purchasing as much of this coverage as possible.
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