Purchasing a home or condo with community areas has a lot of perks. It’s a great place to get to know your neighbors, throw parties and spend time with family and friends. But of course, as with anything else, community areas aren’t without risk.
Insuring these areas, and paying for any damages or lawsuits, is taken on by your condo association or HOA. After all, that’s what those fees go toward, right? But if the cost of repairs or legal fees goes above what is stated in the master policy deductible, your association may require you and your neighbors to cover the rest of the expenses.
Protection for these incidents is known as loss assessment coverage, and it’s an insurance rider that can be added to most condo and home insurance policies. Below, we break down all the frequently asked questions regarding this extra coverage option.
Loss assessment coverage is an insurance rider that home or condo owners can add to their existing policy for more protection should a common area become damaged. While HOA or condo master policies typically cover most types of damages, if the cost of repairs exceeds the HOA coverage limits, they may require community members to chip in on the repair or rebuild costs (even if homeowners didn’t cause the damage).
To determine if you need loss assessment coverage, make sure to look over your HOA requirements and master policy limits carefully. Still unsure if this endorsement is right for you? Let’s break it down.
If you’re a part of a homeowners association, you’re likely familiar with HOA insurance. While HOA insurance is built to protect individuals from paying for damages or injuries that occur in shared spaces, it doesn’t always cover everything.
Hypothetically, let’s say a guest trips and falls at the neighborhood pool, or a light fixture falls from the ceiling in the community center. In these cases, your HOA will most likely be responsible for paying for damages. But if the liability or damage expenses end up being higher than the HOA’s coverage limit, they will often turn to homeowners to cover the remaining costs.
It’s important to note that the exact amount that triggers this financial assistance and how much individuals are required to pay will vary by HOA. Make sure to read through your HOA’s master policy meticulously to become familiar with their deductible limits and the plan they have in place to charge community members if necessary.
Like homeowners, condo owners have an association they contribute to that helps pay for damages and other incidents that occur in common areas. This condo association master policy, in tandem with your condo insurance policy, provides well-rounded protection from whatever happens in your condominium building.
However, if an accident occurs that exceeds your condo master policy’s deductible limit, they may require individual condo owners to help cover the cost. While this is typically split evenly between all units, if the damage only occurred in a specific building, they may only require that building’s residents to pay.
Loss assessment insurance covers you from similar perils as your home or condo insurance policy. This means you’ll have protection against any damage that occurs in public areas from named perils like fire, wind, hail and lighting. You’ll also have coverage from any liability should someone get injured in a community area and sue for help with medical fees or lost wages. But other perils such as hurricanes and water backups won’t be covered, as they need their own riders.
Similar to your home insurance policy, loss assessment insurance covers you from incidents like fire, wind damage and even liability issues that occur in common areas.
It’s also worth mentioning that when it comes to claims, insurance providers will typically lump multiple claims together if they originate from the same peril. For example, if hail from a storm damages the roof of the community building and causes someone to slip and fall, your condo or HOA association will only get one claim for all the costs.
Determining how much loss assessment coverage you need varies from person to person. First, it’s essential to look at your declaration page and understand just how much coverage you have on your own. After determining just what your home insurance will cover, you should ask your HOA or condo association for a copy of their master policy. This way, you can see their coverage limits as well as their deductibles for common damages.
Using this information will help you determine if you need loss assessment coverage. Generally, if you live in a high-risk area, don’t have many neighbors or come to find that your neighborhood’s master policy deductibles are relatively low — you may want to consider this extra coverage.
Here at Hippo, we believe that getting the coverage you need should be affordable and straightforward. If you find your current coverage lacking, just want to learn more about our comprehensive coverage options (some of which include service line coverage and a smart home kit), or want to discuss your specific coverage needs just give us a call. We are always here to help.
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