Condo Association Management Blog

A loss assessment is a property owners share of a loss to property owned in common by all members of a property owners association. Homeowners policies and condominium unit owners policies typically provide a small amount of coverage for such assessments, with additional amounts available by endorsement for an additional premium.

Call your Insurance Agent and speak with them. We went thru this last year. Insurance got so expensive we decided to each homeowner get our own. Now we are Townhome built with condo dec's . So now my insurance in South Carolina went to $1700 a year for full coverage. Keep in mind what it really cost to replace items. Queen sheets, bath towels, clothes etc. Speak to your agent first,

One important note about loss assessment coverage for assessments due to a master policy deductible - most unit-owner policies limit the amount of coverage afforded for these types of assessments and very few companies will provide additional coverage for master policy deductibles. It is important to speak with your agent about these possible gaps in coverage.

Our HOA's insurance company i threatening to cancel our policy as a result of multiple hot water heater claims. The HOA has been trying to get amendments to the policy that allows the board to inspect the water heaters but the community is not willing to make the amendment. 
Has anyone experience with an association NOT having insrance or it becoming " self insured'? Any feedback appreciated. Thanks

@Jean 
 
 
 
Is this HOA for a condo-unit owners association? If so, then you may not need the amendment. If the insurance company is covering the hot-water heaters then it is probably because the association is responsible. If this is the case, then the master documents may give the association power to inspect these devices already. I would suggest a comb through of your documents by an attorney to determine if this is possible. 
 
 
 
Also, it is not unusual to have self-insured homeowners associations. The problem with this, however, is that can the association afford to rebuild everything after a major loss?

Thanks for your feedback. This HOA could not rebuild after a major loss. If the amendment does not pass, we then will be self insured. Knowing that the HOA could not afford a major rebuild, should this motivate us to sell? What is your opinion?

To answer the original posters question, I have some recent experience with this so I think I can offer some insight. Loss assessment coverage isn't mandatory, but it should be. This is additional insurance that the homeowner purchases to reimburse them for special assessments that are covered under the HOAs master policy. This is important, because if the assessment is for something that isn't covered by the HOAs policy, no amount of loss assessment coverage will help you. Where it really comes in handy is in the case I just had, where several (but not all) of the units in my association had mold, which required remediation and roof repair. This depleted our reserve funds and so the HOA voted on an assessment of $2000/unit. Since the master policy paid for some of the work, but not all because of the deductible, we were able to make a loss assessment claim. However, our policy was the standard level and so we only got $1000 back (which is better than nothing!). We raised our loss assessment coverage to $10,000, as a result of this experience. Good luck!

Where can I buy loss assessment insurance out of my state?

@Mary 
 
I would need additional information on what you are looking for. Please share what state you live in and what your concern is. 
 
Thanks!