If you receive a special assessment resulting from an insurance claim that wasn't fully paid by your condo association's policy, loss assessment coverage can help. Here's a look at some ways loss assessment coverage may help prevent you from paying out of pocket for an unexpected assessment.

Weather damage to the outside of the building.

Suppose, for instance, that your condo association has $500,000 in coverage for the building's structure. If a fire or windstorm causes $550,000 in damage, and your association's insurance pays up to the coverage limit, that leaves a $50,000 repair bill. If there are 50 unit owners in your association, each owner could be charged $1,000 toward the $50,000 that exceeded the association's coverage limit.

In that scenario, owners without loss assessment coverage on their condo insurance policies would be required to pay the special assessment out of their own pocket. However, condo owners who have loss assessment coverage could file a claim with their own insurer to help cover that cost. Loss assessment coverage can also help pay for your share of the bill if your condo association issues a special assessment to pay the association's insurance deductible toward a covered claim.

Injury in a common area.

Imagine someone is injured in a common area, such as a clubhouse, tennis court or common stairway. If your condo association is found at fault, its liability coverage will likely pay for the resulting expenses, such as medical bills or legal costs. But if those expenses exceed the association's coverage limit, condo unit owners may be required to pay a special assessment to make up the balance owed. Loss assessment coverage can help prevent you from paying out of pocket in a situation like that.

Damage to shared areas on your association's property.

If a covered incident, like a fire, originates in your unit, but also damages a common area, such as your building's lobby or shared hallway, loss assessment coverage can help pay for repairs.