HOA Loss Assessment: Fix and Avoid Being Held Portion of the Costs (An Expert Guide)

Dec 7, 2020 | Personal Insurance

Getting your own condominium unit is a luxury. The amount you have to spend acquiring a unit, investing in your interiors, and paying your association dues is expensive. The least that you want to happen is to incur unnecessary payables while living in your condo. Unfortunately, the Homeowners’ Loss Assessment is one of the most overlooked coverages in the Condo Insurance Policy. 

Failure to settle the assessed amount may lead to foreclosure of the property. This is regardless of whether only one unit owner missed paying. Having loss assessment coverage will help you mitigate these out-of-pocket expenses and ensure the protection of your beloved investment. If you are a condo owner who would like to secure yourself from these unplanned expenses, read ahead to know more! 

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What is the Homeowners’ Association Loss Assessment? 

Condominium owners are most likely to see major insurance gaps on their Homeowners’ Policies due to their inadequate coverage. To bridge the gap, the insurance industry came up with special assessments to strengthen the protection offered to condo owners. The Loss Assessment is a special assessment that shoulders the expenses incurred to repair the damages to your condominium’s shared areas. Most condo associations have a separate Master Condo Policy that covers these losses. Some states have laws in place to determine the amount that your condo association can levy. Not all homeowners’ policies include loss assessment coverage.

Tips on How to Avoid Being Held Portion of the Cost 

It is easy to get deluged when adding a Loss Assessment to your policy due to its dynamic rules. Here are some stress-free tips on how you can maximize your loss assessment coverage. 


Make a list of building items or areas that are not covered by your Condo Association’s Master Policy. This will help you get a ballpark figure of how much loss assessment coverage you need to add to your condo insurance policy. If it is legal in your area, you may ask your condo association for this document. To prevent losses, the policy limits you choose for your loss assessment coverage should align with your homeowner association’s master policy. 


Assess the risk of being exposed to Earthquakes and add a policy to cover this on your Homeowner’s Insurance. Doing so will help ensure that your loss assessment will cover this peril.


Expand your covered perils on your homeowner’s policy as this could also expand your loss assessment coverage. For example, when you add sewer and water back up on your Homeowner’s Policy, your loss assessment coverage will also cover that peril.


Do not hesitate to increase your loss assessment coverage limits to at least $50,000 to ensure wider protection. When you do so, do not forget to update your Homeowner’s Policy also. 

Be Cautious

Despite its tons of benefits, utilizing your loss assessment is equivalent to filing a claim. Use it with caution and always assess first what is best for the situation. 

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What does the Loss Assessment cover? 

The loss assessment coverage is ever-changing. Most insurance companies update their policy when needed by the situation. You can use the loss assessment if a shared area needs repair or an injury has occurred within the building’s property. 

● Damages to Shared Areas

The most common perils that may damage your building properties are typhoons, hurricanes, and fires. Shared areas such as staircases, pools, gyms, lobbies, clubhouses, and other outdoor spaces are not covered by your condo insurance. This is regardless of your homeowners’ policy. You can apply for loss assessment coverage on instances when your condo building’s common area gets damaged. Damages to shared areas are one of the common reasons why loss assessment claims are filed. Often, reconstruction costs are expensive thus, it is best to have the loss assessment handy. 

● Liability assessments

This will cover physical injuries that have transpired within the building’s common property. For instance, if an injured guest will hold your homeowners’ association responsible, the loss assessment can cover the assessed expenses. This happens when the assessed amount is more than their master policy coverage. There are several types of liability assessments. One of which is an animal liability.

Animal liability

This is insurance you can add to your condo policy. This will cover bodily injuries or property damages your pets caused to people who are not living with you. Due to some condominiums not being pet-friendly, we recommend you avail of animal liability insurance. Say, your fluffy friend accidentally trips your neighbor. Animal liability insurance will shoulder the expenses. 

● Master Policy’s Deductible

Many insurers are now mandating that their clients add wind and hail deductibles to their policies. Due to the complex nature of insurance deductibles, it is best for you to contact your insurance agent in Denver CO to know more. Take Colorado as an example.  Since your homeowners’ association is responsible for the amount not covered by the insurance, they may pass that on to the unit owners. 

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What is not covered by the Loss Assessment? 

Your loss assessment covers damages or perils that are outlined in your condo insurance policy. Unless you get a separate plan, it will not cover the following: 

● Costs brought by building foreclosure or demolition are not covered. 

● The loss assessment does not cover earthquakes, mudflows, floods, and sinkholes. Separate policies can be availed to cover earthquakes and floods. You may consult your trusted insurance agent to know more. 

● More often than not, the loss assessment does not cover the costs of maintaining or renovating your condo building. 

Do I need Loss Assessment Coverage? 

Definitely! If your condominium is part of a homeowners’ association, you are required to pay association dues. They will allocate these dues to maintain the common areas and amenities of your building’s property. There are instances wherein these shared areas may suffer massive damage or loss. As a member of the association, you will be asked to contribute to the repair or reconstruction costs. These costs may rise up to thousands of dollars. 

How to Add Loss Assessment to your Homeowners’ Policy 

To leverage the Loss Assessment coverage, one must have a Condo Homeowners’ Policy. Some Condo Homeowners’ Policies include a standard Loss Assessment coverage of at least $1000 with a $250 deductible on their plans. This is the most that your insurance company will shoulder regardless of the number of assessments charged to it. Due to the complexity and exorbitant cost of reconstructing damages in condominiums, the standard coverage is often inadequate. Instead of being overwhelmed with unnecessary expenses when perils occur, I recommend sizing up your standard Loss Assessment. For only an additional $10 to $25 a year, you can get up to $100,000 or more loss assessment insurance coverage. 

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Take Note When Adjusting Loss Assessment 

If your condo’s clubhouse burned to ashes, your insurer will cover the assessment cost. Your insurance company would bear the cost if the peril causing the damage is covered by your condo policy. Your loss assessment can only be leveraged during the policy period. For example, there was a hailstorm in July, and you received the damage assessment in September. Company B’s loss assessment will be utilized as it is your insurer at the time of the assessment’s release. If the fire is among your covered perils, your insurer will cover the assessment. 

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Let Advantage Insurance Solutions shop Condo Insurance for you today and make sure you have HOA Loss Assessment coverage. Call or text us today at (877) 658-2472 to start the process.

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