Do you own a house or condo? Are you confused about adding loss assessment coverage endorsement? Your place can be a part of the HOA (homeowner association). If it is so, you will be paying HOA fees, and have rules & regulations to follow. You can’t just leave the homeowner association. It is a master plan community made with the state laws. Though many believe it to be bad, we would say it’s not. Why? Because it covers up the loss with its policy.
The fees you pay go towards everything from security to surveillance, which also includes the coverage of loss. But what does an HOA insurance policy cover? If you have any damage to your house or condo, the HOA policy will cover around up to $1000 remaining you will have to pay on your own. This is where the necessity of loss assessment coverage arises.
We know you have many questions like, why should I buy that? What are the benefits? Is it really worth it? So take out a few minutes from your schedule and read this article, here we have mentioned everything from its meaning to its benefits.
First of all,
What is Loss Assessment Coverage?
It is an optional add-on to your condo’s insurance policy, and it’s on you whether to get it or not. Now let’s see what it actually is? Loss assessment coverage can help you in situations where you have to pay out of your pocket.
Your HOA insurance policy will cover almost all the cost of damages (depending upon the insurance policy’s amount and its covered areas). However, if there is excess in a loss, it will be shared among the residents.
If this is the case, you will have to pay from your pocket for the extra expenses, and this is where a loss assessment coverage policy will come in handy.
For example, if the HOA’s master policy is $700,000, and there is a damage of $500,000, the policy will cover the loss. But if the damage exceeds the amount of master policy, you will have to pay. If the damage done to the building is $800,000, the master policy will cover $700,000 only, the rest $100,000 will be divided into members. If it is a 60-unit building, you will have to pay around $1660.
Doesn’t matter whether the damage is in your place, or the shared areas, whether you are involved or not, you will have to pay the excess amount of the loss. Still check the HOA’s master policy thoroughly, many of which include the deductibles.
Also, go through who and how they access the deductibles, different HOAs have different policies regarding deductibles. Check the HO6 properly.
How can you get loss assessment coverage?
Whenever you get a condo policy, there will be a loss assessment coverage form with it. It is purely optional, so you may have to ask about it. While buying a policy, ask about the limits and exclusions, as it differs from one insurance company to another.
You might have to provide the papers of the policy while signing the new property to the Condo Owner Association or HOA.
Does it cover all the assessments?
The straightforward answer is NO. It depends on the insurance company, so research properly on the best insurance company in the city. It is necessary to look at the damage and loss it covers to be double sure.
You don’t want yourself to stuck in a place where you have no option to go back. Suppose the damage to the property is because of some natural calamity, and later you find out the insurance policy doesn’t cover it. You will be left with no option other than paying from your pocket.
Benefits of Loss Assessment Coverage
The main benefit of the loss assessment coverage is its ability to protect you from unexpected expenses that you may have to pay for damage caused to the building or the ground area near your property, be it your fault or not.
It will also help you in the circumstances where HOA has taken a very high deductible for money-saving purposes, or there isn’t any insured policy.
You would have realized the excess amount of the loss is distributed among the unit members, and they will have to pay, so loss assessment coverage will help you out in such situations. Just make sure it covers all the possible causes of damage.
How Much Loss Assessment Coverage will you Need?
This purely depends on the master policy of HOA or condo and you. You can always ask the proprietor for the HOA’s insurance policy, read the details carefully, check what is the deductible amount, and amount of the insurance policy. You can also consult professionals to assess everything and give you proper advice.
Select your policy limits based on the HOA’s master policy limits, and then only you will be able to leverage the full benefits of loss assessment coverage.
You will find loss assessment coverage endorsements from $10,000 to $100,000. One more thing, it also depends on the members included in HOA’s policy. If it is 100 or more, you won’t need to have a large coverage amount but if it around 50 to 60, go for the higher coverage.
Also Read: A Guide To The Best Homeowners Insurance
Is Loss Assessment Coverage Worth it?
With this we are at the end of the article, the conclusion basically depends on you. According to us, obviously, it is worthy. You won’t want to pay expenses for the thing you didn’t do, or something that will harm your future plans. If nothing comes along, you can consider it as an investment. For the house or condo owners who are connected with the HOA’s policy, it is necessary to have a loss assessment coverage, and for the ones who aren’t, get the condo policy that covers almost all the losses, damages, and unexpected scenarios.
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