If something happens to your condo's shared building or common areas that exceeds the condo association's insurance limits, all unit owners may be required to pay a special assessment toward repairs. For instance, loss assessment coverage may help pay to repair damage to common areas that results from an incident that originates in your unit. It also helps pay for your share of the loss assessment or for your costs if unit owners are assessed to pay the condo association's insurance deductible.
For example, suppose hail or wind causes $550,000 in damage to the exterior of your building. If your condo association's policy only provides $500,000 in coverage, the association might divide the remaining $50,000 among the condo owners, leaving you with an unexpected bill. Loss assessment coverage could help prevent you from paying out of pocket for your share of that cost. To help determine how much loss assessment coverage may be right for you, it's a good idea to review your association's master insurance policy to find out how much coverage it has in place.