Did you know your HOA can assess a random bill to you at any time for $1,000s and you’re liable? A recent client received a bill for $25,000!  They’re called “Special Assessments.” However, there’s good news.  You can get insurance to help you with them.  These assessments most commonly help cover occasional losses where the HOA reserve account does not have enough to cover the insurance deductible.  Most recently, they’ve been issued to cover new roofs for an entire community.  I’m not sure if you’ve noticed a major uptick in hail storms and fires in Colorado, but it’s altering the entire way insurance companies cover condo and townhome communities.  Many carriers are pulling out of Colorado entirely.  If they remain, many have changed deductibles from a fixed amount to a variable percentage. I’ve seen “Special / Loss Assessments” issued for whole community repairs such as siding, paint, known structural issues, or even replenishing funds.

STEPS YOU SHOULD TAKE IMMEDIATELY IF YOU OWN A CONDO OR TOWNHOME

• Call your HOA and find out what they recommend for “Loss Assessment” coverage amount. Most HOA insurance agents should have something documented for owners.
• Call your insurance agent and request a quote for “Loss Assessment” coverage in the amount (or higher) your HOA recommends.
  • Verify that they don’t have a low “maximum coverage per claim”
    • Example: I found out my old insurance company issued $25K coverage for me, but also had a max $1,000 per claim. (not helpful).
  • Verify that their claim rules are based on date of assessment (not date of occurrence).
    • Example: Some HOA’s may lag in roof repairs.  So, you could inherit a bad roof and be billed for an assessment where the actual damage occurred before you were the owner. This claim could be denied.

Loss Assessment coverage is typically inexpensive, but could save you from a world of hurt.  Large assessments are burdensome and in the very least become a debt against the property meaning potential loss in equity when you go to sell.

I hope you found this helpful.  If you know someone else who could benefit from it, please use the “share” buttons in the body of the e-mail.

DISCLAIMER: I’m not a licensed insurance agent.  This if for informational purposes only and you should consult directly with a licensed insurance agent to better understand this coverage.