Condominium owners generally aren’t held personally liable for accidents that happen in their building’s common areas. They can, however, end up being financially responsible for any accidents that their association is held liable for. If you own a condominium in Bradford, Vermont, make sure your personal condo insurance policy provides protection against this potential risk. The coverage to look for is loss assessment coverage.
Does Your Bradford, VT Condominium’s Condo Insurance Policy Provide Protection for Loss Assessments?
What is a Loss Assessment?
A loss assessment is a particular kind of assessment.
An assessment is a fee that’s charged to all condominium owners in a building or association. They’re typically used to fund particular projects, such as putting a new roof on, maintaining a condo building’s landscaping, or upgrading a building. The amount of an individual assessment is usually determined by dividing the total cost of the project by the number of condo owners, which ensures everyone pays the same amount for the communal project that everyone (at least in theory) benefits from.
Two common types of assessments are annual dues and special assessments. Annual dues (which may be charged monthly) are usually used to pay for ongoing costs, such as utilities, lawn care, and routine maintenance. Special assessments are typically used to fund upgrades or large projects.
A loss assessment may be assessed when a condo association suffers a loss that it can’t or doesn’t want to fully pay for from the association’s funds. The amount of the loss that the association doesn’t cover may be assessed to the condo owners, spreading the cost of the loss equally across all owners.
Some potential losses that may justify a loss assessment would be a fire or vandalism that causes extensive damage, or an accident that occurs in a condo building’s common area that the association is found responsible for. Most condo associations have their own insurance policies to protect against situations like these, but their policies might not cover all the costs associated with these incidents.
What is Loss Assessment Coverage in a Condo Insurance Policy?
Loss assessment coverage is designed to protect condo owners from this type of risk. Generally speaking, loss assessment coverage covers losses that are assessed by condo associations -- up to the coverage’s limits (and according to its terms and conditions, which are stated in the condo insurance policy’s paperwork). The coverage is meant to guard condo owners from an unexpected assessment.
How Much Loss Assessment Coverage Should Bradford, VT Condo Owners Have?
There’s no single amount of assessment coverage that’s right for every condo owner in Bradford, VT. When deciding how much coverage is right for their particular circumstances, each condo owner should consider potential scenarios that could result in a loss assessment. Here are two examples that show how small or large a loss assessment can be.
If there was a fire that caused $20,000 of damage in the lobby of a condo building that had 10 units, the assessment on each condo owner could likely be relitively small. The condo association’s policy would likely cover the damage, but the policy might have a $5,000 deductible. The association might use a loss assessment to cover the deductible, and each condo owner would need to pay just $500 ($5,000 / 10 condo owners).
If, in the same lobby of the same building, an accident occurred that involved a serious injury or death, the assessment could be very different. A case involving a serious injury or death might settle for $1.5 million. If the condo association’s insurance policy had liability coverage that was limited to $1 million, the association would likely have to use a loss assessment to cover the remaining $500,000. In this case, each condo owner would have to pay $50,000.
Of course, these are just examples. To see just how much a loss assessment from your condo association might be, contact an independent insurance agent who serves Bradford, VT. They’ll be able to help you go through potential scenarios and determine your risk. They can then check your condo insurance policy’s loss assessment coverage to make sure it provides the protection you want. If it doesn’t, an independent agent can also help you find a policy that does give you the protection you’re looking for.