LOSS ASSESSMENTCOVERAGE
WHEN THE MASTER POLICY FALLS SHORT, THE OWNERS ABSORB THE DIFFERENCE.
THE MASTER POLICY HAS LIMITS AND DEDUCTIBLES — OWNERS PAY THE REMAINDER.
When a covered loss exceeds the master policy's limits, or when the deductible on a major claim is large, the association levies a loss assessment against all unit owners to cover the shortfall. The assessment is divided according to the governing documents. Unit owners with HO-6 policies carrying loss assessment coverage can recover their share through their own policy.
A high-rise water damage claim with a fifty-thousand-dollar deductible is split across all owners through an assessment.
When damage exceeds master policy limits or involves excluded perils like flood, owners absorb the uninsured portion.
A verdict exceeding GL and umbrella limits becomes an assessment against every owner in the association.
Owners with loss assessment coverage on their HO-6 can file a claim to recover their share of the assessment.
TAP EACH TRIGGER TO SEE HOW THE ASSESSMENT FLOWS.
Loss assessments happen when the master policy isn't enough. Tap each trigger to see how costs flow to owners.
ADEQUATE MASTER POLICY LIMITS REDUCE WHAT OWNERS PAY OUT OF POCKET.
Loss assessments are a symptom — the root cause is a gap in the master policy. Carrying adequate property limits at replacement cost, appropriate umbrella coverage, proper flood coverage, and manageable deductibles all reduce the frequency and size of loss assessments. Kelly Insurance Group also recommends that associations require all unit owners to carry HO-6 policies with adequate loss assessment coverage, so that when an assessment is unavoidable, the financial impact on individual owners is cushioned by their own insurance.
LOSS ASSESSMENT — ANSWERED.
WHAT IS A LOSS ASSESSMENT?
A charge levied against owners to cover costs exceeding the master policy — large deductibles, uninsured losses, coverage shortfalls, or liability judgments beyond policy limits. Divided per the governing documents.
HOW DOES LOSS ASSESSMENT COVERAGE WORK FOR OWNERS?
Owners with HO-6 policies including loss assessment coverage file a claim against their own policy to recover their share. Standard HO-6 includes a base amount that can be increased.
WHEN DOES THE ASSOCIATION LEVY AN ASSESSMENT?
Large deductibles after major losses, damage exceeding policy limits, excluded perils like flood, liability judgments exceeding GL and umbrella, and emergency repairs reserves can't cover.
HOW IS THE ASSESSMENT DIVIDED?
Per the CC&Rs — typically by ownership percentage, unit size, or equal shares. The allocation method determines each owner's share and how much their HO-6 coverage needs to reimburse.
CAN THE ASSOCIATION REDUCE ASSESSMENT EXPOSURE?
Adequate master policy limits, manageable deductibles, proper reserves, and requiring owners to carry HO-6 with loss assessment coverage all reduce the frequency and impact of assessments.
DOES LOSS ASSESSMENT COVER CAPITAL IMPROVEMENT ASSESSMENTS?
No. HO-6 loss assessment only covers assessments from covered losses — property damage, liability claims, insurance shortfalls. Planned capital improvements and deferred maintenance assessments are not covered.
STRUCTURE THE MASTER POLICY TO MINIMIZE OWNER ASSESSMENTS.
Kelly Insurance Group builds association programs that reduce the gap owners absorb — adequate limits, manageable deductibles, coordinated coverage. Since 1881.
The availability of coverage and eligibility for coverage can depend on numerous factors. We cannot guarantee that all customers, individuals, and businesses looking for coverage will be successful in these efforts when contacting our team. All policy coverages and terms need to be fully reviewed by the respective consumer to ensure the coverage asked for is what is specifically being quoted or provided by any insurance policy. Insurance Policies, Coverage Changes, and their terms and conditions are not bound or altered until written confirmation is provided by one of our licensed team members or underwriters. This page does not offer legal advice, legal opinions, or policy interpretations. Rather, this page is meant as a resource to help provide customers and insurance consumers with additional considerations that may help in their insurance buying or pursuit of insurance information. Kelly Insurance Group does not employ or direct attorneys.
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