Midwest Home Insurance Carriers as well as Condominium and Homeowners Associations are experiencing a severe increase in the number of Wind and Hail losses and their severity. This means the insurance companies are losing money and therefore non-renewing &/or changing coverages. The main change in coverage for HOA’s is in establishing a higher ($5,000 per Building Min. up to $ 20,000) and/or a percentage (1% - 5% per Building Value) deductible on the HOA master Dwelling policy. Thus, there will be a larger number in situations where the HOA will come back to their homeowners (based on their documents) and create a “special assessment” 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 town home owner as the result of a financial obligation the HOA cannot pay for that is Insurance related. In order for your home HO-6 insurance policy to pick up coverage, the loss assessment coverage must be included in your policy and the Wind & Hail perils must also be defined as a covered peril.

Your HO-6 condo or townhome policy coverages will extend loss assessment for these insured losses.

* Example: Let’s say your HOA has a severe wind/hail loss and the total amount of the loss is $1,000,000. The HOA policy has a 1% wind/hail deductible that would total 1% per building each valued at $2,000,000=$20,000 deductible per building for this claim. If you had 10 similar buildings damaged your Association’s deductible would be $200,000. Let’s assume that the HOA has only $25,000 (Reserves) to cover the cost of the deductible so that they will be forced to assess the condo owners a portion of this $175,000 shortfall. Hypothetically, let’s say each condo owner has to come out of pocket $2,000.00 for this assessment. Most HO-6 condo or townhome policies come with a standard $1,000 to $10,000 loss assessment coverage. You would have to pay – worst case scenario - $1,000 of your own money after the loss assessment coverage of $1,000. 

So how do you pursue this affordable option? The best way to counter this situation is to increase your loss assessment coverage to $10,000 minimum. This will cost your policy between 0 - $5 per year! That’s it! Great Coverage for a small price!