Explained: What Are Condo Insurance Loss Assessments?

condo insurance loss assessment

When you are the owner of a shared property, like a unit in a condo building, sometimes the responsibility of damage to that shared property is split between all the unit owners. Subsequently, the cost of repairing these shared damages will also need to be divided up equally between all the owners. That is where a “loss assessment” report comes in.

Damages ‘Loss Assessments” Are Used For

Not every damage to a shared property, like a condo building, is the same. Loss assessments are usually only needed when the damages affect all of the owners. When all or none of the owners are specifically responsible, the cost of the repairs of replacements need to be shared by all.

For example, if the garage door, something in the building that is used by everyone, stops working for no apparent reason, no specific individual is responsible for the damage. That means all owners will be required to share the cost of repairing the garage door. Another example of when the building may require a loss assessment is if the elevator fails, with no one specifically at fault. In a case like this, it may be up to all owners to share the cost of repairing or replacing the elevator.

Loss assessments may also be required if there is an injury in a shared building area of which all property owners would share the liability of the injury.

What About The Building’s Insurance?

The building “group” or Strata council probably have their own building condo insurance that could help cover these costs, but using the insurance deductible isn’t always the most economic choice. Essentially, the strata group could opt-out of the building’s insurance policy, save the deductible (as well as increased premiums for their claim) and instead share the costs equally between them. This is all part of the overall loss assessment.

Is Someone Specifically At Fault?

If a specific unit owner accidentally drives into the garage door, they are at fault and will be responsible for the repairs instead of all the owners. The same goes for damages that come from a specific unit owner’s apartment, for example if there is a leak coming from a unit that causes damage to another unit or to the building. It will be the responsibility of that unit owner at fault (and their insurance) to cover those damages.

What Details Do A Loss Assessment Include, and Who Produces It?

A loss assessment will determine the exact damages that need to be addressed, options to address it, the total amount of money that is needed to repair or replace what was damaged, as well as how the cost will be split up between all of the shared owners (if the building’s insurance is not used). The loss assessment is created by the building’s internal group or Strata council. Many times a general meeting is required in order to vote the loss assessment into approval.

Condo Strata Council Group Meeting

Loss Assessment Coverage Insurance

A unit owner in a condo building should have sufficient insurance to cover any damages or liability that come from his/her unit. However, extra specific loss assessment coverage is usually needed as an add-on, if the owner wants to be covered for shared damage expenses and liability. That is where loss assessment coverage can be a life saver! Contact us to learn more and to get a FREE quote on loss assessment coverage for your building/unit today! We’d be happy to help answer any questions you may have.

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