What Is Loss Assessment Coverage?
Condos come with a lot of shared responsibility!
When an injury in a common area or damage to property happens, you may be asked to pay. Now, this may be leave you asking- How am I responsible for damage that I didn’t cause?
When a claim happens, people tend to then review a policy to find out if they are covered. This seems like a very backwards process of guesswork. So, what can you do to make sure you are properly covered?
First of all, condos are shared spaces and thus in the event that the main condo policy does not have enough coverage, you the unit owner may be asked to pay. For a simple example, let’s look at a situation where a lawsuit arises in a common area like a party room. Many condos have party rooms that get rented out for birthdays, milestones ect. What happens If a party-goer is injured on condo property and decides to sue? The liability limit for the building may not be adequate to cover the suit. If the base liability limit is $2 million and the lawsuit reaches $4 million and there are 100-unit owners in total ($2 million divided by 100 owners), each unit owner could receive a loss assessment of $20,00 for their share of the damages. We can never predict what’s going to happen, especially with many different unit owners and their guests within shared areas.
Your Loss assessment coverage for liability will protect you if the main condo buildings policy does not have enough coverage to pay out in the event of a lawsuit. Carefully review this limit to make sure it fits with what you are comfortable with and if you are not sure ask a broker.
What limit Should I Have on Loss Assessment coverage?
Pay close attention to the condo corporations master policy to determine what limits and deductibles apply for losses. As we see multiple policies in place for condo situations you want to be certain that your policy will not leave you under insured. With liability lawsuits ever increasing in Ontario you share legal responsibility and ownership with the other unit owners for the common areas in the condo.
A condo typically has more than one policy holder when it comes to insurance. The condo corporation is the first policy holder that has a master policy to cover rebuild for the structure, secondly the unit owner protects his or her investment with an individual policy. In a lot of current situations for units being rented out a third tenants policy exists. This ensures that all 3 parties (the condo corporation, unit owner and renter) in the transaction are covered for liability arising, contents and rebuild costs.