Many insurers have begun reducing their exposure to catastrophic losses by selling insurance policies with special deductibles for storm damage. Most condominium association master policies have a deductible for wind or hail damage. For example, if a condominium suffers a hailstorm that damages the buildings to the cost of $2,500,000 and the master policy has a five percent deductible, the homeowners could be responsible for that five percent – in this case $125,000. Assuming fifty homeowners, each one would be responsible for $2,500, which would be assessed by the association.
Loss assessment is a coverage that is available as part of condo insurance HO-6 form and could provide coverage for certain kinds of losses where the association would ask you to pay for your share of damages that is either not covered under the master policy or exceeds the existing coverage. If you are a homeowner, speak to your insurance agent to understand what your limit is and check your insurance amounts on your policy declaration page. If you manage an association, make sure the homeowners are aware of loss assessment coverage prior to the need for it.