Loss assessment coverage is an optional add-on to a homeowners or condo insurance policy that provides additional out-of-pocket expense coverage for qualifying perils. It can help prevent a homeowner or condo owner from paying out of pocket if their association issues a special assessment to pay for damages that exceed the master policy’s limits.

Here are some key points to know about loss assessment coverage:

• What it covers: Loss assessment coverage can help cover a homeowners share of the cost of damages assessed by a homeowners association (HOA) for incidents that occur in shared areas of the property, such as lobbies, stairwells, pools, outdoor spaces, and more.

• How it works: Ordinarily, the homeowners master policy provides coverage for incidents that occur in these shared areas; however, if the amount of the damages exceeds the master policy’s limits, the residents of the condo may end up having to contribute financially (whether they were involved or not). By adding loss assessment coverage to your condo insurance policy, you may be able to avoid paying out of pocket for these types of expenses.

• Who needs it: Loss assessment coverage is not a required add-on to a condo or HO6 insurance policy, but it can come in handy in the event of unexpected damages. It can be a wise choice for a homeowner or condo owner who is in an association and who may not be able to afford to pay their share of a costly master policy claim.

• What it doesnt cover: Loss assessment coverage doesnt pay for property improvements that arent connected to an issue covered by your insurance policy.

• How to buy it: Loss assessment coverage is offered by most home insurance providers and can be added to a homeowners or condo insurance policy as an endorsement. The cost associated with loss assessment coverage is included in the overall home insurance premium.