As a condo dweller, you’ve got it good. Everything inside your walls is your kingdom. You pay your homeowners’ association dues so the HOA can take care of the rest, maintaining the building, common areas, landscaping and more.
So, if a fire damages the lobby of your building, you’re not out any additional money, right? Actually, not quite.
When an HOA has an unexpected loss to cover, it may bill back a percentage of the cost to the property owners, dividing it among the units. It’s known as a loss assessment, and, no, your monthly dues don’t cover it.
Let’s say the lobby sustains tens of thousands of dollars’ worth of damage in a fire. The good news is, your HOA’s insurance policy will cover it. The bad news is, there is a deductible the HOA has to pay, and it could cost thousands of dollars. Your HOA may issue a Loss Assessment to cover the deductible. So, if your building has 10 units and the deductible is $5,000, your share could be $500. That’s doable.
Now, however, imagine a guest sustains a serious injury while the lobby is under construction and wins a lawsuit against the HOA. The HOA’s liability insurance covers most of the settlement, but there’s $500,000 left to pay. Time for another loss assessment, and this time your share is $50,000. Not so doable.
Is there any way to avoid paying the entire $50,000 out of your own pocket? Possibly. The typical condo insurance policy includes Loss Assessment Coverage for just such occasions, but there are a few important things you should know:
The next logical question, of course, is: Do I have Loss Assessment Coverage, and how much? Talk to your independent insurance agent to find out and to purchase more, if needed.
After all, do you really want to pay a loss assessment out of pocket when you could have a perfectly good policy do it for you?
About Frank Siciliano, WHINS Insurance Agency
Frank Siciliano has been an all-lines agent with the WHINS Insurance team since 2012 and has been in the insurance game for nearly 10 years. WHINS Insurance Agency serves the San Fernando Valley and greater Los Angeles area from its home base in Encino, Calif., with a focus on providing great coverage at a great value, all in a timely and professional manner. Frank is fiercely devoted to his clients. He specializes in auto, home and umbrella insurance but works tirelessly to insure whatever his clients throw at him. He lives in the Faircrest Heights area of Los Angeles with his wife, children, four cats and a fish, and he provides free online insurance quotes at www.whins.com/frank.
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