The HOA Board Quarterly Winter 2013 Issue #8 | Page 13

Assessments – Monthly, Special, Loss, Earthquake Loss
By Michael Berg

E

very member of a community pays
assessments. It’s not an option. But there are
many different types of assessments, and recently
we have fielded calls asking questions about how
insurance relates to each type. Perhaps a little
discussion is in order to help separate the
kinds of assessments that can be insured for
by an individual member, and those that are
simply part of life in an HOA.
First off, monthly assessments and special
assessments cannot be insured for by an
individual. Plain and simple, they are the dues an
individual member pays as part of a community,
and assessments for maintenance expenses in
the common area.
On a homeowner’s policy or condominium unit
owner’s policy, there is coverage for Loss
Assessment. This coverage is available,
typically at limits of $10,000, $25,000
and $50,000. The coverage provides
protection for a very specific type of
assessment, not all assessments
delivered to a community member.
Basically, if there is a loss insured
for on the HOA master policy and
the cost of the loss exceeds the HOA limit
of insurance, the amountb in excess of the loss
is split among the community members and
assessed as a Loss Assessment. This is what is
insured for on the homeowner’s or condominium
unit owner’s policy.

association common property is damaged by
an earthquake, the cost to repair that damage
will likely be split among the members of the
association and delivered in the form of an
Earthquake Loss Assessment. This type of
loss assessment can be insured for through the
California Earthquake Authority (CEA). There are
a few carriers that write their own earthquake
insurance. In either case, the carrier will
provide a limit of coverage for earthquake
loss assessment, subject to a deductible,
that the policy-holder can use to pay the
assessment received from the HOA to repair
common property. It’s important to note that the
CEA policy coverage applies only to condominium
owners.
Just like general maintenance is not covered by
insurance, neither is an assessment to perform
that general maintenance. However, if there is
insurance for damage caused by a covered event
(i.e. fire), loss assessment insurance may