HOA Homeowners Need to Have Adequate “Loss Assessment Insurance”

All too often owners of condominiums and properties that are part of a common interest development learn about HOA loss assessment insurance the hard way– that is, when the need arises after a loss and they find out that they either don’t have any coverage, or they don’t have an adequate amount of coverage.

Loss assessment coverage is insurance that is purchased by homeowners and not the homeowners association. It is not necessarily included in every homeowner’s policy, or if it is, it likely has a very limited amount of coverage (i.e. $1,000). Frequently, it is offered as additional optional coverage that is made available to homeowners. Loss assessment insurance is designed to protect homeowners against the risks of having to pay a special assessment that has been levied by their homeowners association on members to cover the cost of a loss that exceeded the limits of the association’s insurance coverage. The following are two examples of when loss assessment insurance would apply: