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.