Condo insurance policies, like home and renter’s insurance, have many options that can be added to the policy. There are options for water leaks and the damage they cause, home equipment breakdown coverage, replacement cost versus actual cash value coverage, identity theft, credit card fraud, and even scheduled items coverage. There is one option no condo insurance policy should be without though, and that is homeowner’s assessment coverage.
The homeowner’s assessment option provides coverage for the condo owner or buyer when the Homeowners Association, or HOA, assesses the owner to help pay for repairs to the building or roof that the HOA policy doesn’t cover or provide enough coverage for. Let’s examine what it does and doesn’t cover.
What It Covers: This covers any assessment that is requested resulting from an insurance claim. For example, if there is a bad hail storm and the roof(s) need to be replaced, this option would provide coverage if the association assesses owners to help pay for replacing the roofs. Other examples include assessments for a major plumbing leak, a fire, or severe wind damage.
What It Doesn’t Cover: HOA assessment coverage does not cover assessments that are not related to an insurance claim. This could be for cosmetic updates, new pool furniture, maintenance items, etc. Those, unfortunately, will be paid from on an out of pocket basis by each owner.
Most condo insurance carriers provide limits ranging from $500 to $50,000. I usually recommend carrying a limit of $25,000. The cost to add this to a policy ranges from $0 up to $150 per year which is much easier to handle than an assessment of $25,000!
What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!