Lots of condo owners in Michigan assume “everything” is covered under their association’s master policy. But when shared losses come due, there can be holes that are covered by loss assessment coverage. Let’s examine how condo assessments work and why you may want loss assessment coverage on your policy through Janis-Shunta Insurance, serving Muskegon, MI.

How Special Assessments Work

Every condominium association in Michigan has a master policy. This policy provides coverage on the areas of the condo building that are shared between all units. Things like hallways, roofs, stairs, and other structures are covered on the master policy. If there is a large enough loss to the building where the master policy doesn’t cover all of it, or if a liability claim exceeds the association master policy limits, the condo association can make an assessment to divide the remaining cost between the units. A large loss like wind damage to a common roof could result in assessments of thousands of dollars apiece depending on how much damage occurs.

What Loss Assessment Coverage Covers

Loss assessment coverage is an optional coverage that’s added to a condo owner’s insurance policy. Loss assessment coverage will pay the owner their portion of an assessment made by the condo association due to a covered loss. Older condo buildings with older roofs and deteriorating systems are at a higher risk for large assessments. Be sure to review your master policy before buying loss assessment coverage. Request a copy of your condo association’s master policy and review it. You’ll want to know how much coverage the master policy provides as well as any large exclusions. Based on that information you can make an educated decision on how much loss assessment coverage you need.

Owning a condo means sharing responsibility for the building with your neighbors. By adding loss assessment coverage to your policy, you can avoid shouldering expensive repairs alone if a loss occurs. Contact Janis-Shunta Insurance, serving Muskegon, MI, to learn more.

Condo owners in Muskegon, MI, understand the importance of having insurance. A winter storm can cause power outages, burst pipes, and severe damage throughout your home. Tornadoes can tear through neighborhoods, destroying pools, tennis courts, and playgrounds. This often raises the question: who is responsible for the cost of the damaged amenities?

Personal Policy Coverage

Your personal condo insurance policy typically does not cover shared amenities, such as a dog park or playground. Instead, it provides coverage for your property and personal belongings. This may include damage to your condo’s structure or items inside, such as appliances.

Master Policy

Shared amenities, such as a community pool or the building’s roof, are usually overseen by a Homeowner’s Association (HOA) or Condo Association. These organizations are responsible for obtaining a master policy that covers shared assets. The master policy ensures that common areas and shared structural components are protected.

The Deductible

While the master policy typically covers shared amenities, the deductible must still be paid. Some HOAs require all residents to contribute an equal amount toward the deductible, while others use HOA fees to cover it. In rare cases, some personal condo insurance policies may help cover the master policy deductible, but this depends on the insurer. Agents at Janis-Shunta Insurance can help you understand what’s included in your policy.

Covered Events

Every insurance policy, including the master policy, specifies a list of covered perils. These often include certain natural disasters, vandalism, theft, wind damage, and lightning damage. However, specific events, such as tornadoes or floods, are often excluded. In these situations, a personal policy would still not cover the damage.

We understand that navigating how personal and master policies work together can be confusing. There are several factors that insurance companies consider, but our agents are here to make it easy to understand. Contact us at Janis-Shunta Insurance today to learn more. We proudly serve the Muskegon, MI, area.