Deductible Assessments
In the past few years, two trends have emerged when it comes to association master-policy deductibles:
You cause a kitchen fire with $50,000 total fire and water damage.
Between the association master policy and your unit-owner policy, your claim was paid in full, and you're happy as a clam.
Then two months later, you're hit with a bill from your association for $10,000 - the entire master policy deductible! You submit the bill to your homeowner's insurer, which declines your claim, leaving you responsible for the entire $10,000 assessment.
Here's why: A basic unit-owner homeowner's policy limits coverage for loss assessments to $1,000 but it only covers assessments made association-wide - it doesn't cover assessments against individual unit owners.
Even if you buy extra loss-assessment coverage, the policy still requires association-wide assessments in order to compensate you.
It also limits deductible assessments to $1,000.
There is no uniform solution that all insurance companies have agreed to.
The norm, however, is to offer an optional endorsement called deductible assessment coverage (or something similar).
There's no requirement that the assessment be association-wide so it does cover individual assessments such as the one in this example (as long as you had purchased at least $10,000 of coverage).
Make sure that you add this coverage to your unit owner's policy in the amount of your association's master policy deductible.
Be sure to check with your insurer as to how they handle this risk - it may do things a bit differently.
- The deductibles have been increasing to save on insurance costs.
Deductibles of $10,000 are becoming the norm. - Individual unit owners are being assessed the entire deductible if the claim is confined to their unit (your dishwasher overflows, damaging your hardwood floors) or if the unit owner caused the loss (you cause a kitchen grease fire).
You cause a kitchen fire with $50,000 total fire and water damage.
Between the association master policy and your unit-owner policy, your claim was paid in full, and you're happy as a clam.
Then two months later, you're hit with a bill from your association for $10,000 - the entire master policy deductible! You submit the bill to your homeowner's insurer, which declines your claim, leaving you responsible for the entire $10,000 assessment.
Here's why: A basic unit-owner homeowner's policy limits coverage for loss assessments to $1,000 but it only covers assessments made association-wide - it doesn't cover assessments against individual unit owners.
Even if you buy extra loss-assessment coverage, the policy still requires association-wide assessments in order to compensate you.
It also limits deductible assessments to $1,000.
There is no uniform solution that all insurance companies have agreed to.
The norm, however, is to offer an optional endorsement called deductible assessment coverage (or something similar).
There's no requirement that the assessment be association-wide so it does cover individual assessments such as the one in this example (as long as you had purchased at least $10,000 of coverage).
Make sure that you add this coverage to your unit owner's policy in the amount of your association's master policy deductible.
Be sure to check with your insurer as to how they handle this risk - it may do things a bit differently.
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