Published: May 7, 2015

Colorado Home Insurance Carriers as well as Homeowners Associations are experiencing a sever increase in the number of hail losses and their severity.  This means the insurance companies are losing money and changing coverage’s.  The main change in coverage for HOA’s is in a mandatory percentage deductible on the HOA master Dwelling policy coverage.  Thus, there will be a larger number of situations where the HOA will come back to homeowners looking for assessment money to pay for the shortfall in the deductible.  What is Loss Assessment?

  • Loss Assessment Coverage in general will pick up the amount assessed to a condo or townhome owner as the result of a financial obligation the HOA cannot pay for.  In order for your home insurance policy to pick up coverage, the loss assessment must be a covered peril.  These covered perils are defined in your policy.

Is Hail covered under the Loss Assessment?  Yes.  HO 6 condo or townhome policy coverage’s will extend loss assessment for hail related losses.

  • Example:  Lets say your HOA has a sever hail loss and the total amount of the loss is $1,000,000.  The HOA policy has a 2% wind/hail deductible so the total deductible is $200,000.  Lets assume that the HOA has only $100,000 to cover the cost of the deductible so they are assessing the condo owners a portion of this $100,000 shortfall.  Hypothetically, lets say each condo owner has to come out of pocket $2500.00 for this assessment.  Most HO 6 condo or townhome policies come with a standard $1,000 loss assessment coverage.  You would have to pay $1500 of your own money after the loss assessment coverage of $1,000.

So how do you combat this affordably?  The best way to counter this situation is to increase your loss assessment coverage to $10,000 minimum.  This will cost your policy between $5-25 per year!  That’s it.  Great coverage for a small price. Here are some recommendations on coverage for a Condo or Townhome owner HO 6 policy.

  1. DWELLING COVERAGE $25,000
  2. LIABILITY $500,000
  3. LOSS ASSESSMENT $10,000
  4. CONTENTS: DEPENDS ON WHAT YOU OWN
  5. REPLACMENT COST IS A MUST
  6. RING AND JEWELRY RIDERS: DEPENDS ON WHAT YOU OWN
  7. DEDUBITLE $1,000

If you have any further questions on Loss Assessment, I would recommend giving us a call to discuss. Rick Cline Agent Owner: All Access Ins 303-932-1700