Do You Have Enough Loss Assessment Insurance Coverage?

We are not insurance agents or salespeople. We do not sell homeowner’s property insurance policies. We are PUBLIC ADJUSTERS who represent the policyholder in the event they have a claim for a loss or damages (against the insurance company). Public Adjusters deal specifically with the insurance claims process. We have seen all types of insurance claims; each being different. No two claims are the same for a variety of reasons. Each insurance carrier is different. The facts surrounding the claims are different.

We would like to help homeowners better prepare for unexpected events or losses. One particular provision of your homeowner’s insurance policy is or may be the “loss assessment” provision or endorsement.

What is loss assessment and who needs loss assessment coverage? Loss assessment coverage, simply explained, is a policy that works in addition to your homeowner’s association (HOA) policy. It provides protection to homeowners when the common areas and buildings have been involved in a claim. Loss assessment covers the remaining out-of-pocket expenses due to qualifying perils that are not covered under the HOA’s policy.

If you live in a community that requires you to be part of a homeowner’s association (HOA), you should have loss assessment protection. Homeowners associations have the right to levy an assessment on you or your property in the event the community or homeowner’s association suffers a loss to property or a liability. Loss assessment insurance coverage protects the homeowner against losses to the common areas assessed to you by your HOA. If your home is part of an HOA, you and other members of the HOA pay dues for shared services and amenities. If the shared amenities or property sustain damage or if a guest has an accident in the common areas, the HOA may be held responsible to pay for damages. Usually, the HOA has an insurance policy in place to cover such damages. However, the policy may have a large deductible, or the payout may demand more than is covered by the HOA’s insurance policy. In such cases the HOA may levy an assessment on each member or homeowner of the HOA. Loss assessment is covered by the dwelling portion of your property insurance. For instance, perils such as fire, vandalism, etc. are covered under the dwelling portion of the insurance policy. Let us say a major hurricane damages major parts of all your common area buildings such as a gym, restroom facilities, and/or gathering rooms leaving $2 million necessary in repairs. However, your HOA master policy only carries $1 million in property damage coverage. In which case, the HOA may assess the extra $1 million to the individual homeowners. So, if you have 500 homes or condos, each home will be assessed $2000. Of course, lot sizes or size of condos and HOA bylaws may impact the percentage of the assessment.

In addition, liability issues may be covered under the loss assessment. For instance, if a guest is injured utilizing a shared amenity such as a pool. If a guest who suffers a severe life altering accident in the common area pool successfully sues the HOA for $1.5 million and the association only has a liability policy coverage of $1 million, the individual homeowners will be responsible for the remaining $500,000. Thus, depending on how many homes are in your HOA, you will be assessed the remaining $500,000.

How much loss assessment coverage do you need? Well, that depends on several factors. First how much insurance does your HOA hold and what is the deductible. How many homes are in the HOA? What type of alluring attractions such as gyms, pools, tennis courts, kitchens, bars does your association share. Keep in mind each HOA is different and you will have to review your master HOA policy to determine your HOA’s bylaws. As a member and interested party (homeowner) you should have access to determine and review what if any insurance policies your HOA has in effect and the respective coverage, costs, and deductibles.

As public adjusters we have encountered situations where the insured did not have enough coverage under their own policy to pay the assessment the HOA levied on the homeowner. We suggest your review your insurance policy for loss assessment coverage. Typically, you will have $1000 loss assessment coverage. For a few more dollars per year (anywhere from $15.00 to $47.00) you may be able to increase your loss assessment coverage to $5,000 depending on your insurance carrier.

When requesting your insurance carrier or agent to increase your loss assessment coverage, you may be required to obtain a letter or confirmation from your HOA stating that there are no pending, current or outstanding loss assessments for the Master’s Association (or the proper title of your HOA).

Below please find a sample of the loss assessment language in a typically homeowner’s insurance policy:

Loss Assessment. We will pay up to $1000 for your share of loss assessment charged during the policy period against you by a corporation or association of property owners, when the assessment is made as a result of: a. "Bodily injury" or "property damage" not excluded under Section II of this policy; or b. Liability for an act of a director, officer or trustee in the capacity as a director, officer or trustee, provided: (1) The director, officer or trustee is elected by the members of a corporation or association of property owners; and (2) The director, officer or trustee serves without deriving any income from the exercise of duties which are solely on behalf of a corporation or association of property owners. This coverage applies only to loss assessments charged against you as owner or tenant of the "residence premises." We do not cover loss assessments charged against you or a corporation or association of property owners by any governmental body. Regardless of the number of assessments, the limit of $1000 is the most we will pay for loss arising out of: a. One accident, including continuous or repeated exposure to substantially the same general harmful condition; or

b. A covered act of a director, officer or trustee. An act involving more than one director, officer or trustee is considered to be a single act. The following do not apply to this coverage: 1. Section II – Coverage E – Personal Liability Exclusion 2.a.(1); 2. Condition 1. Policy Period, under SECTIONS I AND II – CONDITIONS.

HOMEOWNERS HO 04 35 04 91

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

HO 04 35 04 91 Copyright, Insurance Services Office, Inc., 1990 Page 1 of 1

LOSS ASSESSMENT COVERAGE

1. Increased Limit – Residence Premises For an additional premium, the limit of liability for Section I Additional Coverage 7 and Section II Additional Coverage 4, Loss Assessment, is increased to: Increase in Limit Total Limit of Liability* Liability* $ $

SPECIAL LIMIT – We will not pay more than $1,000 of your assessment that results from a deductible in the policy of insurance purchased by a corporation or association of property owners. 2. Additional Locations For an additional premium, we agree to pay, up to the limit of liability listed below, your share of covered loss assessments as described in Section I Additional Coverage 7 and Section II Additional Coverage 4 of the policy, arising out of the premises listed below.

Location of Unit* Limit of Liability*

SPECIAL LIMIT – We will not pay more than $1,000 of your assessment per unit that results from a deductible in the policy of insurance purchased by a corporation or association of property owners. Section II – Coverage E – Personal Liability Exclusion 2.a.(1) does not apply to this coverage. *Entries may be left blank if shown elsewhere in this policy for this coverage. All other provisions of this policy apply.

The increased limit of $5000.00 is displayed on the declaration’s pages.

D’Orsa and Associates, LLC Public Adjusters will review your current homeowner’s insurance policy free of charge and make suggestions for you to address with your insurance agent. Should you suffer any damages to your home or business, contact our public adjusters at (877) 742-3587 for help with your insurance claim. We will represent you throughout the entire claims process to help you fully recover from your loss.