If you own a condo, it is likely that you have two types of insurance coverage on your property. The first is the master policy, owned by the condo association, that protects the common property and structure of your condo. The second is your individual condo unit owner’s HO-6 policy, which protects your personal property up to the policy limits you have selected. Attorney Bill Voss explains how both of these policies don’t ensure that you won’t have to foot a large bill in the case of property damage. In the event of a master plan insurance claim, you could have to pay a large deductible.
Why Do I Have to Pay a Portion of the Deductible If My Own Unit Is Not Damaged?
As a partial owner in a shared area, your condominium association retains the right to charge assessments—fees for membership dues, additions or improvements to the property, and other costs. When a condominium or co-op is held financially responsible for a portion of property damage, it can require each individual unit owner to pay a portion of the costs of the deductible (the portion not covered by the master insurance provider).
If your condo complex is damaged, you could owe hundreds or thousands of dollars depending on your policy’s deductible and the number of units in your complex. This is because many HOAs split the cost of the deductible between all of the condo owners, particularly if the damage occurred in a shared area. A loss assessment can be issued to a condo owner if there was damage to one or more units in your building, a pool or tennis court, a park or fitness center, or the grounds surrounding the property.
Deductible Assessment Insurance Can Offset HOA Deductible Costs
If your master plan deductible is large, or if you could ever be in a position to pay the entire deductible, you may wish to consider purchasing deductible assessment coverage. This coverage must be purchased in addition to an HO-6, and covers your costs in the event that you are stuck with a large deductible to pay toward your master policy claim. In many cases, this coverage can mean paying just a few extra dollars in order to avoid suddenly getting stuck with a bill for thousands.
Loss assessment insurance coverage can provide payment for:
- Your share of damages under your HOA agreement.
- Damages that are not covered under the building master policy.
- Damages that exceed the existing coverage on the building or HOA insurance policy. Assessments to cover an injury on your premises
- Your share of other deductibles for claims filed by your HOA or condo association (such as government flood damage policies or Texas wind insurance).
In most cases, loss assessment coverage requires a policy endorsement purchased at the time the condo owner buys a property damage insurance policy. If loss assessment coverage is not specifically listed under your policy declaration page, you can contact your insurance provider to ask about the coverage, including what your limit is and whether you will have to pay a separate premium or deductible.
The best way to know if you need deductible assessment coverage is to understand all of the insurance policies associated with your condo unit, as well as what your responsibilities would be in the event of property damage. If you have questions about your coverage needs or about a recent condo insurance claim, talk to one of our attorneys today. The Voss Law Firm can examine your policy, investigate the details, and ensure that your coverage will offer payment for your losses. Simply fill out the contact form on this page today or order a free copy of our book, Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.