What Is Loss Assessment Coverage and Why Is It Important for Condo Owners?

Special Correspondent | Last Updated : August 8, 2023

As a condo owner, you’re likely aware that condo insurance and homeowners insurance aren’t the same. The coverage you need as a condo owner can be unique. One type of coverage that’s particularly important to consider is loss assessment coverage.

In this article, we’ll explain loss assessment coverage, why it’s important for condo owners, and what to look for when choosing a policy.

What Is Loss Assessment Coverage?

Loss assessment coverage is a type of condo insurance that helps protect you from unexpected costs associated with damage or losses to common areas or shared spaces in your condo building. In other words, if your condo association is hit with unexpected expenses that aren’t covered by the association’s insurance policy, loss assessment coverage can help cover your share of those expenses.

There are a few different scenarios when loss assessment coverage might come into play. For example, if a natural disaster damages the condo’s shared spaces (such as the lobby or community pool), the condo association might not have enough insurance to cover all the repair costs. In this case, the condo association might levy a special assessment on each owner to cover the remaining expenses.

There are many other situations where a condo association might assess owners for additional expenses. For example, if a lawsuit is filed against the association, or if a repair project goes over budget, the association might need to assess owners to cover the excess costs.

Why Is It Important for Condo Owners?

It’s easy to see why loss assessment coverage is important for condo owners. If the condo association levies a special assessment, you could be on the hook for thousands of dollars in unexpected expenses. Without loss assessment coverage, you could be forced to pay out of pocket or take out a loan to cover your portion of the assessment.

But there are other reasons why loss assessment coverage is important as well. For one, it can help protect against liabilities that might not be covered by your standard condo insurance policy. And because the policy is relatively inexpensive, it’s a small investment that can provide peace of mind and financial security.

What to Look for in a Policy

If you’re considering loss assessment coverage, there are a few important things to look for when choosing a policy:

Coverage Limits: Make sure the policy has sufficient coverage limits to meet your needs. Consider how much your condo association might levy in special assessments, and choose a policy that can cover that amount.

Deductibles: Like other insurance policies, loss assessment coverage often comes with a deductible. Make sure you understand the deductible and how it might affect your out-of-pocket costs.

Exclusions: Be sure to read the policy carefully to understand any exclusions or limitations that might apply. For example, some policies might not cover special assessments related to earthquake damage.

Cost: Finally, consider the cost of the policy. While loss assessment coverage is typically quite affordable, it’s still important to shop around and compare rates from different providers to make sure you’re getting a good deal.


Loss assessment coverage is an important type of insurance for condo owners to consider. Protecting unexpected expenses related to shared spaces can help provide peace of mind and financial security. When choosing a policy, be sure to consider coverage limits, deductibles, exclusions, and costs to make sure you’re getting the best coverage for your needs.

With the right policy in place, you can rest assured that you’re protected against unexpected expenses and liabilities.

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