Loss Assessment Coverage For Ontario Condos

What is loss assessment coverage for condos?

Loss assessment coverage is an optional add-on to your condo policy that protects you from financial liability in the event your condo corporation imposes a special assessment due to unforeseen events, or a claim.

This additional coverage helps pay for your portion of expenses that the condo association may require all condo owners to pay if there's property damage to common areas of the building, or if liability claims are greater than the limits of the condo corporation’s policy.

It's important for condo owners to purchase their own condo insurance, in addition to what's included in their monthly condo fees, and to add this optional coverage to their insurance portfolio, in order to avoid any gaps in coverage between the master policy and their own policy.

Is your condo insurance covering loss assessments?

Learn about the crucial role of loss assessment coverage and protect your investment. Get the clarity you need on loss assessment coverage and ensure you're properly protected. Get a free quote today!

Get A Quote Now

What does loss assessment cover?

Here are some examples of what loss assessment coverage would cover:

• Fire or water damage: Significant incidents like fires or water leaks that impact multiple units or shared spaces can result in substantial loss assessments.
• Windstorm or hail damage: Severe weather can cause extensive damage to the building's exterior, leading to costly repairs.
• Liability claims: If the condo corporation faces a lawsuit and is found liable, the resulting costs may be passed on to unit owners through a loss assessment.
• Structural damage: Unexpected structural problems, such as foundation issues or roof collapses, often require expensive repairs that could trigger a loss assessment.

Example of loss assessment coverage

Condo owner Sarah faced a $10,000 loss assessment fee following a severe windstorm that damaged the exterior cladding of her high-rise. Fortunately, Sarah had loss assessment coverage included in her Toronto condo insurance policy. Consequently, her insurer covered the $10,000 assessment, preventing Sarah from facing significant financial hardship. Sarah would have been personally responsible for the substantial out-of-pocket expense without this coverage.

What is not included with loss assessment coverage?

While loss assessment coverage is a valuable safety net, it doesn't cover everything. Typically, exclusions include:

• Routine maintenance and upgrades: Expenses for regular upkeep and planned renovations are not covered.
• Mismanagement or negligence: Claims arising from poor management by the condo corporation might not be covered.
• Bylaws violations: Issues from your own violation of condo bylaws are unlikely to be covered.
• Pre-existing conditions: Damage caused by pre-existing conditions that were known before the assessment is usually excluded - one of the many reasons why even condo owners should get a home inspection.

How much loss assessment coverage do I need?

How much loss assessment coverage you require really depends on your financial situation and the condo development you live in. Here is a closer look at what you can do to determine what and how much coverage you should purchase:

• Review the master policy: Obtain a copy of the master policy from your condo association. This will outline the building's coverage limits and deductible amounts, giving you a better understanding of your unit's coverage.
• Check for past assessments: Contact your condo association for a history of past assessments and any special assessment scenarios. This information can provide insights into the condo's condition and the association's management.
• Assess potential risks: Evaluate the amenities and common areas within your condo complex for any signs of disrepair or potential hazards. This assessment can help you determine the appropriate coverage amount.
• Consult your coverage provider: Discuss your current needs and concerns with your provider. They can offer professional guidance on your coverage options.
• Compare policies: Research different policies and their coverage options. The goal is to find affordable coverage that meets your protection needs.

How much does loss assessment coverage cost?

Generally, the annual cost of loss assessment coverage is relatively low compared to the potential financial impact of a large special assessment. It's often a few hundred dollars per year, a small price to pay for the peace of mind it provides. The cost of your coverage can be influenced by several factors. These include:

• The size of your unit, with larger units potentially incurring higher premiums.
• The age and condition of the building also play a role, as older buildings with possible maintenance issues may lead to increased premiums.
• The location of your building can affect the cost, with buildings in high-risk areas potentially facing higher premiums.
• The insurer you choose can also impact the cost, as different insurers offer varying rates.