Here at Blue Lime, we’re totally obsessed with making sure you have all the information you need to make the most informed decisions possible! Today, we want to talk about an extremely important topic, and one that’s near and dear to our hearts: HOA insurance coverage for individual homeowners. Specifically, we want to talk about the importance of loss assessment insurance.
Many homeowners have experienced first hand calamities like a major hurricane or other significant weather storm and have had to face the subsequent rebuilding. It’s very likely that in these situations, you’ve had to also help your community rebuild, too. Theoretically, your HOA’s insurance covered all damages, but it’s also highly likely that you, the homeowner, still got stuck with the part of the bill that insurance didn’t cover. What if there was a way to protect yourself from these unexpected costs? There is!
There are actually many potential perils that can affect a planned community, especially if you live in a condominium setting. These perils can result in claims that exceed the HOA’s regular insurance coverage limit. Some examples of situations where members of an association could find themselves in a situation that results in costs that go above and beyond the HOA’s insurance coverage limit include:
- Major weather damage.
- Injuries in the common area, for example mishaps on the tennis court, in the pool, or at the clubhouse.
- Damage to shared property inside the building, for example to the elevators, lobby, carpeting, etc.
When calamities like the above occur, the HOA can charge residents special assessments to cover the difference between what is still owed and what the insurance covered. This special assessment is called a loss assessment.
Loss assessments happen when an HOA doesn’t have enough insurance to cover the payout of a big claim, like an injury claim.
You may think it won’t happen to you, and we hope it never does, but consider this all too common scenario: if a storm comes to town and strips away parts of a building your HOA is responsible for, repairs can be upwards of $550,000. If your HOA policy covers up to $500,000 in property damage coverage, the remaining $50,000 could be charged to residents in the form of a loss assessment.
In some cases, like those involving personal injury lawsuits, the amount still owed after insurance stepped in can be much higher. This is where loss assessment insurance would step in and cover the balance due.
So, How Do I Know If Assessment Insurance Is Right for Me?
Assessment insurance coverage is designed to protect individual residents, like you, for those times when claims against the HOA exceed the limits of the HOA’s master policy.
If you are part of an association, we strongly recommend that you get this coverage.
Though the odds of such a catastrophe happening may seem slim, owners without loss assessment coverage may find themselves in a very expensive situation if they become partly responsible for a liability claim.
Ok, I’m Sold! How Do I Get Loss Assessment Insurance?
Once you decide to obtain loss assessment insurance, you first need to figure out how much coverage to purchase. We recommend you review your HOA’s master policy, and look for these specific items:
- review your HOA master policy and determine what the HOA is responsible for.
- See what the coverage limits are, and whether there are special deductibles for certain issues.
The good news is that loss assessment coverage is relatively inexpensive, and it can often be added to your homeowner’s insurance policy. Your insurance agent will be able to help guide you to the coverage type and amount that is best for you.