Deductible and "Loss Assessment" Coverage?

Started by StephenT1 • 6 replies • 491 views

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StephenT1
Posts: 6

Posted:

Our South Carolina POA's Master Deed specifies, I believe, that in the case of an insured casualty claim, the unit owner shall pay whatever the insurance does not cover, typically the deductible, which can be $10,000 per incident. The historical practice, however, has been that the unit owner is only required to pay the deductible if s/he *negligently* caused the damage, for instance by not replacing an aged water heater which leaks and damages wooden floors and walls.
Do HO-6 homeowner insurance policies typically include "Loss Assessment" coverage? Is it a reasonable expectation that POA owners purchase such coverage, even if their assessments are applied to the master insurance policy?
If the deductible is only assessed on the property owner involved and not the entire membership, is this still a "Loss Assessment"?
Comments?
Thx,

The relevant paragraph from the Master Deed:
Wherever the maintenance, repair and replacement of any items for which the Owner of a UNIT is obligated to maintain; repair or replace at his own expense is occasioned by any loss or damage which may be covered by any insurance maintained in force by the ASSOCIATION, the proceeds of the insurance received by the ASSOCIATION, or the Insurance Trustee hereinafter designated, shall be used for the purpose of making such maintenance, repair or replacement, except that the Owner of such UNIT shall, in said instance, be required to pay such portion of the costs of such maintenance, repair and replacement as shall, by reason of the applicability of any deductibility provision of such insurance, exceed the amount of the insurance proceeds applicable to such maintenance, repair or replacement.

SheliaH (Indiana)
Posts: 6,964

Posted:

You really need to run this past your insurance agent. He or she should be able to get a copy of the association's master insurance policy and compare that with your policy to ensure there's no overlap.

Your assessments do pay for the master insurance, but just like your own homeowner's policy, there are deductibles and limits as to what the policy will pay out, and some things aren't covered at all (which is why you need to read them). I live in a townhouse community and our master policy doesn't pay if the damage to the common area was caused by a homeowner's misuse abuse or negligence. Depending on the cost of the damage, the homeowner would be responsible for the association's deductible and maybe a little or a lot more. We're also responsible for everything from the drywall in, as well as the points where utility lines enter the unit. So, if your pipes freeze and break, and there's water damage to your home and possibly the folks next door, you'll be responsible for all of that.

In looking at my own policy, loss assessment is another word for special assessment. If the community needed repairs that the association's reserve fund and operating funds (plus whatever the insurance pays, if anything), the homeowners would pick up the rest. Usually, special assessments require a homeowner vote, as they can be several hundreds or thousands of dollars. My policy has a $500 deductible for this coverage, which I had to add to the standard policy. Hopefully, I'll never have to use it, but paying $500 would be the hell out of paying $5000 of a special assessment, so that may be a coverage you should seriously consider adding.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

BrookeW (Florida)
Posts: 7

Posted:

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CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By BrookeW on 11/11/2020 7:07 AM
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GeorgeS21 (Florida)
Posts: 3,808

Posted:

Moderator - please remove BrookeW.

CathyA3 (Ohio)
Posts: 6,299

Posted:

For a real answer:

I think the OP's Master Deed is the norm: an owner's HO6 policy also needs to cover the association's deductible.

I asked our condo association's insurance agent about "negligence". He said that they don't look at that, it's strictly who pays for what according to the CC&Rs and the various policies.

By paying the owner's share of the repair costs, no matter what the alleged justification, you're passing a cost that legitimately belongs to the owner onto the the rest of the community. The board is putting the interests of an individual owner ahead of those of the association - in my book, that's a failure to meet their fiduciary duty.

So put in the claims and let the process work, no matter how tempting it may be to play "the nice guys" in the moment.

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