Please ensure Javascript is enabled for purposes of website accessibility

This device is too small

If you're on a Galaxy Fold, consider unfolding your phone or viewing it in full screen to best optimize your experience.

Skip to main content

What Is Loss Assessment Coverage?

Kailey Hagen

Our Insurance Expert

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

Most people know they need homeowners insurance if they own a single-family home, but figuring out what kind of coverage a condo owner needs isn't always straightforward. One of the lesser-known coverage types worth considering is loan assessment coverage. In this article, we'll look at what this is, how it works, and when it makes sense for condo owners.

What is loss assessment coverage?

Loss assessment coverage serves as a bridge between a homeowners association (HOA) master policy and the individual condo owner's insurance policy. It helps the condo owner reduce or avoid out-of-pocket costs due to damages in common areas. For example, it pays for damaged stairwells, pools, gyms, and other services, as well as for liability claims if someone is injured in one of these common areas.

A typical homeowners or condo insurance policy doesn't provide this coverage, nor does umbrella coverage for condo owners.

What is loss assessment in a condo insurance policy?

Loss assessment coverage in a condo insurance policy is designed to protect condo owners from paying out of pocket for claims related to damages in public areas of the homeowners association.

It's usually optional, but condo owners who skip it could face surprise bills if someone is injured on the property or if a natural disaster damages common facilities.

Will your condo building pay for damages?

Homeowners associations typically have a master insurance policy that provides liability coverage and coverage for the buildings themselves. But these policies don't always cover everything. If the damages cost more than the policy limit, the HOA may call upon condo owners to help it cover the rest.

Condo owners may also have to pay some of the cost if the damages are less than the HOA's master policy deductible. Costs are usually split evenly among the HOA members, but every HOA is a little different.

How does loss assessment coverage work?

If a HOA bills condo owners for damages due to one of the reasons listed above, the condo owner can file a claim with their insurance provider. The insurance company will pay up to the policy limit to cover the homeowner's portion of the bill.

All a homeowner has to do is file a claim, just as they would for a fire, theft, or natural disaster. Submit a copy of the bill showing the amount of the damages and the condo insurance provider should pay for it or reimburse the homeowner for the cost.

What does loss assessment insurance cover?

Loss assessment coverage for homeowners typically protects against the following:

Damage assessments

Damage assessments occur when there's damage to a common space, like a pool or gym for members of the HOA. It could also cover stairwells and other areas used by residents of many separate condos. If the HOA's master policy won't cover the full cost of the repairs, condo owners may have to pitch in.

Liability assessments

If someone is injured in a common area and they sue the HOA successfully, the HOA may divide some of the costs among condo residents.

Deductible assessments

Deductible assessments occur when the HOA requires condo owners to pay a portion of its master policy's deductible to help it cover the costs of a claim.

Does loss assessment insurance cover all assessments?

Loss assessment insurance doesn't cover all assessments. It depends on the condo owner's plan and what perils it protects against. For example, if the damage to the condo happened as a result of flooding or an earthquake and the condo owner doesn't have coverage for these perils, then their insurer wouldn't pay out for a loss assessment claim.

Do you need loss assessment coverage?

Condo owners aren't required to have loss assessment coverage, but it's often a good idea to purchase it anyway. Without it, condo owners could face unexpected costs following a natural disaster. These could potentially cost hundreds or thousands of dollars.

How much loss assessment insurance coverage do you need?

The amount of loss assessment coverage a condo owner needs depends in part on how the HOA handles assessments. It's a good idea for the condo owner to speak with the HOA to learn how much coverage its master policy has and what sort of claims condo owners could be responsible for. It may be able to provide a suggestion as to how much coverage to buy.

Typically, condo owners in HOAs with fewer residents will want more coverage because in the event of a claim, there are fewer people to divide the costs among. By contrast, when there are more homeowners, each has to foot a smaller portion of the bill.

Why is it important to have loss assessment?

Loss assessment is important to help HOAs run smoothly. Their master policies are often expensive and can carry high deductibles. They're not always able to cover the full cost of the damage on their own. By passing some of the expenses onto condo owners, the HOA can continue to provide its services to its residents.

How much does loss assessment insurance cost?

Loss assessment coverage is usually pretty affordable. In some cases, it costs $25 per year or less. But it depends on how much coverage the homeowner wants and where they live. Purchasing more coverage or living in an area prone to natural disasters, like hurricanes, will raise the cost of loss assessment insurance.

Does loss assessment coverage have a deductible?

Some insurers that offer loss assessment coverage may require condo owners to pay a deductible if they need to make a claim. But this deductible will usually be much lower than what the homeowner would have to pay if they didn't have loss assessment insurance.

How to get loss assessment coverage

Condo owners interested in loss assessment coverage can usually get it through their homeowners insurance provider. It's available as an optional add-on, but its cost varies from one company to the next.


  • A standard homeowners insurance policy typically doesn't cover HOA assessments. Condo owners will need to add loss assessment coverage to get this protection.

  • No, umbrella policies don't cover loss assessment. Those interested in this kind of protection should add loss assessment coverage to their policies.

  • The condo owner's standard insurance policy would need to provide protection against earthquakes in order for its loss assessment coverage to pay for an earthquake-related claim.

  • No, typical condo insurance doesn't cover special assessments. That's why investing in loss assessment coverage is usually a good idea.

  • Condo owners should look into a condo insurance (HO-6) policy and they may also want to consider adding loss assessment coverage to this for enhanced protection.