Condo Insurance – Loss Assessment Coverage

If you were to ask an insurance carrier what type of policy has suffered the most from storms in the Midwest over the past years, the answer would easily be habitational accounts. The habitational class includes rental properties, apartment complexes, and condo associations, to name a few. These policies have large property exposures, as you can guess, which makes large storms their worst enemy. Many changes have been made to how these accounts are insured as a result, including higher deductible requirements.

We’re going to focus on condo associations, specifically how they can affect the unit owner, for the purpose of this topic.

If you’re a condo owner, you may not think that this would have much of an effect on you. The condo association is generally responsible for the exterior of your unit, and you’re responsible for the interior. If a hail or windstorm were to come through, it’s very seldom that it would impact the interior of a unit.

The trickle-down effect of these new insurance requirements is higher loss assessment coverage. Loss assessment coverage covers the unit owner for what they are assessed by an association after a claim. The claim may exceed the HOA’s coverage limits, or the policy may have a high deductible. In either case, unit owners could potentially be assessed to cover part of the cost.

It has also become more and more common for condo associations to require a specified amount of loss assessment coverage on a condo unit owner’s policy. This directly reacts to higher deductible requirements on an HOA or condo association’s insurance policy. Often, their policies now have percentage deductibles for wind/hail, which can potentially push deductibles to be tens of thousands of dollars. To negate having to handle the entire deductible, unit owners may be leaned on to chip in. Loss assessment coverage protects the unit owner in this situation.

Whether your condo association is requiring it or you just want added protection, loss assessment coverage can be increased at any time. Coverage limits offered depend on the insurance carrier. If this added coverage interests you or you would like to learn more, reach out to your local CRG agent.