What is Loss Assessment

In condominium communities, the exterior of buildings, certain building components, and common areas are typically owned by all the condominium owners as a group.  In the event of earthquake damage to such property, the association may, in accordance with its bylaws, impose an assessment against all members of the association to pay for exterior or structural repairs.

This coverage is unique to condominium owners, in that if damage from an earthquake occurs and the losses are not fully covered by the association’s master insurance policy, Loss-Assessment coverage may help you pay for your share of certain assessments the association may impose on all property owners in your condominium development.

A partial list of assessments not covered are those made to pay for the repair of nonresidential structures, awnings, patio coverings, pools, spas, club houses, artistic features, or separate parking structures.

What does Loss-Assessment coverage cover?

If your condominium owners association imposes an assessment to repair damage caused by an earthquake, Loss-Assessment coverage may help pay your share of certain assessments.

You may buy CEA Loss-Assessment coverage even if your condominium owners association does not have a “master” earthquake policy in force.

Today, an increasing number of condominium homeowner associations are either buying earthquake coverage with high deductibles or electing not to purchase earthquake insurance at all.

As a result, there is a greater likelihood that homeowner associations will use unit-owner assessments to repair damage following an earthquake.  This results in an increased probability of loss under a CEA policy with Loss-Assessment coverage-requiring the CEA to adjust premiums for this coverage over time.

  • You should know that your HOA community carries insurance to minimize exposure to financial loss in the event of an earthquake.
  • However, depending on the severity of damage, the rebuilding cost assessed to each Owner could be between as much as $51,709
  • While an earthquake is not preventable, you can protect yourself against this potential financial impact.
  • A $50,000 OR $75,000 Earthquake Loss Assessment Policy will close or reduce the gap between what the HOA policy covers and the actual cost to rebuild.
  • For an additional premium, you can include coverage for Personal Property, Loss of Use and Real Property (such as counters, cabinets, and drywall).

Please don’t delay in asking your Insurance Agent to review your CC&Rs and advise you on the coverage you need. You do not want to find yourself under-insured or over-insured (wasting money) in the event of an earthquake.