You might have heard the term loss assessment coverage and wondered what this means. Is it an insurance policy that you should have as a renter, business owner, or homeowner? Or, is it something that can be added to an existing insurance policy?
Well, loss assessment coverage is a type of insurance policy, but there is a bit more to it than that. So, let’s take a closer look at what exactly this type of coverage is and when is the right time to get it. Also, we will answer some common questions that people tend to have when finding out about what loss assessment coverage is. And, while we’re at it, we will discuss the loss of use policies as well.
What is Loss Assessment Coverage?
Loss Assessment Coverage is an insurance policy that goes hand-in-hand with an HOA policy. It is designed for a condo, apartment, or common area owners and residents and provides protection when the building is involved in an insurance claim. As an addition to the HOA policy, it will cover the remaining costs and expenses for things that wered not covered under your HOA insurance policy.
Each month when you pay your HOA fees, this money is used for upkeep and repairs for the common areas, and this typically includes the insurance policy as well. However, if there is an accident that causes a claim to be filed, then loss assessment coverage will cover more than what the regular HOA policy will.
Similar to any other insurance policy, you will have a deductible that you will have to pay, and the rest of that amount will be covered by the loss assessment coverage policy. This deductible can be anywhere between 5,000 and 25,000 dollars, depending on the exact policy you have and how much coverage you want.
This type of coverage allows you to have more protection so you will not have to pay money upfront for whatever damage or liability is needed. This is ideal for all HOA residents to have so that you don’t have to pay for out-of-pocket costs on top of your HOA fees when someone is injured or something is damaged.
What is Loss of Use Coverage?
There are other types of coverage that you could have when your building is involved in a claim. Loss of Use Coverage is one of these policies. If you are unable to use that building and are forced to stay somewhere besides your permanent address, then you will have additional living expenses covered by this policy.
This type of coverage offers financial assistance for additional living expenses because when you are not living at home, your expenses are likely to be higher. If you are unable to use the kitchen for cooking meals, then you may spend more on going out to eat during the week. This will make your food spending higher than it would usually be for groceries. This is what will be covered.
All other smaller differences in what you normally pay will be covered when there is a larger cost for you. From rental space for those who have damage to their home to cover the cost of a rental car when your vehicle needs repairs, so that you will not have to cover the cost out of your own pocket.
What is the Difference Between Loss of Use and Loss Assessment Coverage?
Though these two types of coverage seem to be a bit similar, they are quite different. Both are helpful during times when you need a little help and can cover costs for certain things during a time when you would’ve had to pay for it yourself.
The difference between these two coverage options comes down to what that policy covers. The Loss Assessment Coverage policy will cover the costs for you when your condo or apartment complex is involved in an insurance claim. This could mean that any damages or liability is covered passed your deductible.
However, a Loss of Use Coverage policy will cover additional financial needs that should be taken care of. This will include any personal expenses that are increased or changed during the time of the claim. If this means that you will need to vacate your home or residence for the claim to be completed, like in the case of damages, then the cost of living could be covered.
Also, the price of food and personal items that are increased due to the situation will be covered as well. In short, the Loss Assessment Coverage handles the bigger issues like liability and damages, and the Loss of Use Coverage will cover smaller things like food and necessary lodging.
However, a loss of use coverage policy is not just for your house, it can also cover the expenses for your car. If you have damage to your vehicle that needs repairs for some time, this policy will help cover the costs of renting another vehicle or paying for other transportation methods that you will need to use.
Frequently Asked Questions
How much loss of use coverage do I need?
How much loss of use coverage you need is based on how much coverage you already have for the house. If you look at the limit for that insurance policy payout, then you will want to have a loss of use policy that covers between 20 and 30% of that total amount. If the amount is $15,000 in total, then you will want a loss of use policy that covers around $4,500 to $5,000.
How does the loss of use coverage apply to autos?
If you need a loss of use policy for automobiles, then you can get that as well. The way that a loss of coverage applies to cars and other vehicles is that the loss of use policy will cover the cost of a replacement vehicle or any other transportation costs that occur when the vehicle is being fixed or will be replaced with another vehicle.
This is usually done by giving you reimbursement for a rental vehicle, which typically amounts to a credit of up to $30 each day that you need to rent a vehicle.
How do I file a loss of use claim?
If you have a loss of use claim that you’d like to file, then you want to take the proper steps to get it done. So, here is a list of steps that you will need to follow.
- Report accident or damage as soon as possible.
- Check the daily amount that you can claim with your policy.
- Check which types of vehicles you are allowed to claim when getting a rental.
- Take photos of the damage before getting it fixed.
- Get a timeline of when the repairs will be done.
- Ensure to have all documents given to the insurance company promptly.
- Provide any additional documents that the insurance company requests.
Also, some companies have different ways of doing things, which can make it differ from the list we provided. So, it is a good idea to contact your insurance company to get any specific steps that you need to take to file a loss of use claim with them.
Loss Assessment Coverage Wrap-Up
On top of having your HOA insurance, it can be a good thing to have loss assessment coverage as well. This will not only help you protect yourself and your wallet, but it will ensure that you feel safer when dealing with issues like damages or injuries on HOA property.