CBS Insurance Group is an independent insurance brokerage agency that carries some of the best coverage options in the Florida.

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Loss assessment coverage is added protection if damage to your condo exceeds your HOA insurance policy limits. Loss assessment coverage is already built-in to your condo insurance policy, with a coverage limit of up to $1,000.

What is Loss Assessment Coverage?

Loss assessment coverage protects you in the case you’re asked to pay out of pocket. 

In what situations would you have to pay out of pocket? (we hear you ask). 

  1. Let’s say your HOA needs to file a claim, residents will need to split the deductible equally. As a reminder, an insurance deductible is an amount of money they choose when purchasing a policy, that will be subtracted from any future claims payouts. Deductibles for HOA insurance tend to start at around $10,000 but can go as high as $50,000.
    Btw- some condo insurance policies do cover HOA deductibles so should check your HO6 policy to see if it’s covered.
  2. Condo owners pay monthly payments to a Homeowners Association (HOA). These payments cover things like security to the maintenance of shared spaces and HOA insurance. If your building or shared spaces are damaged, your HOA will cover costs up to its coverage limits. Any costs beyond those limits will be split equally among condo residents. This is called a loss assessment.  

Let’s say a visitor was seriously injured in the condo pool and sues the HOA for $2,500,000. Since every condo owner technically owns a part of the pool, they’re also responsible for damages. If the HOA master policy has $1,000,000 in liability coverage, the remaining $1,500,000 is the responsibility of the condo owners. With 100 condo owners on the development, each owner will owe $15,000, which they’d have to pay out-of-pocket unless they have insurance in place. 

What is covered by loss assessment coverage?

Your loss assessment coverage will cover you for the same damages as your regular condo insurance, aka an HO6 policy. These damages, also known as named perils, are 16 things that could happen to your home or your personal property. They include:

  • Fire or lightning
  • Windstorm or hail
  • Explosion
  • Riots
  • Aircraft
  • Vehicles
  • Smoke
  • Vandalism
  • Theft
  • Falling objects
  • Weight of ice, snow, or sleet
  • Accidental discharge or overflow of water or steam
  • Sudden and accidental tearing, cracking, burning, or bulging
  • Freezing
  • Sudden and accidental damage due to short-circuiting
  • Volcanic Eruption

How much loss assessment coverage do I need?

Usually, loss assessment coverage is already built-in to your condo insurance policy, with a coverage limit of up to $1,000. In most states, you’ll have an option to increase that coverage amount with an ‘add-on.’ 

How much loss assessment coverage you need depends on the potential dangers on your condo development. You should also take a closer look at your HOA master policy. This will shed light on what the HOA is responsible for versus what you’re responsible for, how high their coverage limits go, and whether they have special deductibles for certain hazards.  Add-ons policy limits tend to range between $10,000 up to $100,000. 

-Loss of Use Coverage

Loss of use is a type of insurance coverage – it’ll help with temporary living expenses if your place becomes uninhabitable due to a peril like a fire, windstorm, etc.

What is loss of use coverage?

Loss of use coverage (code-named ‘Coverage D’ in your insurance policy) is a type of coverage your insurance company provides if your place becomes uninhabitable due to a peril. It’s one of the six common insurance coverages you’ll find on your basic homeowners insurance policy, and one of five types on a renters insurance policy.

Think about all the expenses you could rack up above your normal daily spend if you had to leave your place: hotel bills, eating out, laundry… the list goes on. Not being able to live at your own place is expensive. But luckily, your insurer will be there to help.

Keep in mind, though, you’ll only get reimbursed if the reason you weren’t able to live at home was something your insurance company agreed to cover in the first place.

What’s covered by loss of use insurance?

  • Additional living expenses
  • Fair rental value
  • Government intervention

Additional living expenses and loss of use coverage

The first type of loss of use is additional living expenses. Luckily, this type of coverage is pretty straightforward.

If your place becomes uninhabitable due to one of the perils laid out in your policy (either to your place or your property), you can submit any necessary expenses above your normal day-to-day spend.

It may help you out with things like:

  • Housing (hotel, motel, etc.)
  • Moving costs
  • Temporary storage of your stuff
  • Eating out (above the norm)
  • Laundry
  • Parking

Here’s an example of additional living expenses in practice:

Say you’re living in an apartment in Brooklyn with $1,000/month rent, and your food and entertainment expenses are $500/month. It’s the winter, and your pipe suddenly bursts even though it’s well-maintained and protected from the cold. Not only were all of your clothing and shoes ruined, but you’ll have to clear out for a week (and still pay rent).

Let’s say you get a hotel room ($500), and pay for meals there ($250). Since you would have typically paid $375 per week ($1500/4 = $375), your insurance company will most likely reimburse you for the extra $625 you had to pay to relocate (hotel + increase in food costs).

A small note here is that your insurer will only cover you for the shortest time possible.

So, if you were thinking, “Score! A month of a paid staycation at my favorite hotel,” then you might need to adjust your expectations a little. When bad stuff happens, the bills can rack up pretty fast, but lucky for you insurance will come to the rescue with additional living expenses.

Fair rental value and loss of use coverage

Fair rental value is the second part of loss of use.

This is less common than additional living expenses, but relevant for homeowners who rent out a portion of their home. If the portion rented out becomes unlivable due to fire (for example), you’ll be reimbursed for what you could have made during those days.

So if it’s unlivable for 4 days, you’ll be reimbursed for 4 days of rent if you were planning to rent it out.

There is a limit on how much you can claim for this area of loss of use (sometimes referred to as ‘Part D’) so make sure to carefully check your policy.

Government intervention and loss of use insurance

The last thing covered under loss of use insurance is the least common: government intervention.

If, for some reason, the civil authority (i.e. the people in charge of your community, town, city, state, etc.) says you cannot live in your place due to a peril affecting houses or buildings near you, you’ll be covered under loss of use insurance.

The best example of this would be wildfires in California:

When there’s a threat that your house may burn down, the state government might issue a mandatory evacuation of your area.

Since fire is a peril, you’d be covered for up to two weeks, under the Civil Authority clause under loss of use.