Condo owners - does your insurance policy have "Special Assessment Coverage"?

I did some google searches, most results talk about Florida...just wondering if the condo owners here have special assesment coverage on their individual HO policy , what insurer, what state, what the dollar limit is on special assessment coverage, and if its included or an extra cost feature

There are some condos I am looking at that may have a large special assessment levied sometime in the next few years, and I am hopeful there is coverage for this...

Ill be contacting my insurance pros shortly, in the meantime FW condo owners please chime in

This may also be a good time to make sure you do have this coverage, or find an insurer who does, if you think your development may need special assessments in the future

I never bought HO insurance when we owned our condo. We had a policy much like a renter's insurance policy for the contents and liability, but the COA paid for insurance to the structure and it was included in the monthly assessment.

I really find it doubtful such coverage is offered. Special assessments are caused by poor management and are 100% avoidable by a well managed COA. The COA which had our building had been around for 42 years when we moved and had never once had to impose one, and 42 years is enough time for major work to be needed. As a matter of fact, they replaced the elevators while we lived there, and I'm sure that wasn't cheap 16 floors @ 5 elevators, no special assessment.

Frankly you're looking at a big honking red flag that would make me look elsewhere. Special assessments tell me the COA is incompetent, and you're looking at more headaches down the road.

edit: added the phrase "monthly assessment." to the end of paragraph 1.

SUCKISSTAPLES said: just wondering if the condo owners here have special assesment coverage on their individual HO policyYes, our condo HO policies automatically include special assessment coverage of up to, I believe, $2K at no additional charge. In order to obtain seamless coverage with the umbrella policy, that was increased to $25K at a cost of $4 or $5 per year. By the way, we have the same exact special assessment coverage on our house, as that is required by our umbrella carrier (Travelers).

Keep in mind, however, that this type of coverage only protects you if the special assessment is caused by an otherwise covered eventuality. So, if there is a fire, a covered peril, that destroys common areas and necessitates a special assessment, your insurance kicks in. On the other hand, if a special assessment is levied as a result of the condo complex needing general maintenance or upgrades, that's not a covered peril and your insurance would not pay anything towards it.

In the vast majority of the situations out there, special assessments are caused by the latter rather than the former, so you won't be able to rely on special assessments coverage to protect you.

SIS - we were offerred special assessment coverage for a very nominal annual fee (less than $75 if I recall) and it covered up to $50,000. It was offerred by the same policy provider as the condo's master insurance. I declined.

thx v

Do you know if it only paid out as a result of covered perils, or any type of special assessment?

SUCKISSTAPLES said: thx v

Do you know if it only paid out as a result of covered perils, or any type of special assessment? I never saw the policy documents, so I am not in a position to comment

If they could build a big enough reserve fund they could run the place off of interest payments.

scrouds said: If they could build a big enough reserve fund they could run the place off of interest payments.I suppose that's true, except that the vast majority of condo owners would tell you that doing so would constitute one of the most irresponsible ways to manager HOA fees. This is because this strategy would force current owners to pay substantially higher HOA fees (and to accept lower property values that come with them) than those required to maintain common areas just to make it cheaper for future owners, as it would take dozens of years to get to a point where interest payments alone would be sufficient to run the association.

It seems like special assessment coverage would never be offered for general maintenance items. What would prevent the majority of condo owners for all getting generous coverages and then planning a very special assessment.

geo123 said: WalStMonky said: Special assessments tell me the COA is incompetent, and you're looking at more headaches down the road.Not necessarily. While noone wants to have special assessments every couple of years and such frequent special assessments are often a sign of very poor planning, a lot of people are also not big fans of enormous reserve funds held by the association. After all, it is your money going into the reserve funds and a lot of people think that it is inappropriate for an association to maintain reserve funds sufficient to cover a nuclear holocaust as opposed to cutting HOA fees and leaving a reasonable amount in the reserves that would be sufficient to pay for most emergencies. A lot of people are not opposed having a reasonable special assessment every 10-20 years to pay for the largest maintenance items and/or big emergencies as opposed to having to pay more into an enormous reserve fund when that money could instead by used to lower the HOA fee and, in the process, increase property values.

To me, both frequent/very large special assessments and enormous reserve funds often serve as a warning sign that the HOA doesn't quite know what it's doing.

I was the treasurer of a 242 unit co-op in NYC and agree. Why would you want to overpay maintenance over an extended period of time just in case there is a major repair? Sell your unit and leave and you don't get it back. Now I am a homeowner and of course don't prepay a roofing contractor in the event I need a replacement, but it seems condo or co-op owners don't want to envision themselves as homeowners who may need to shell out a large amount of money for a repair.

Well guys, I stand by my statements above. However I will amend "Special assessments tell me the COA is incompetent," to "Special assessments almost certainly tell me the COA is incompetent,"me the COA is incompetent,"

I've got no clue how the COA I lived under did what they did, as they were the antithesis of the stereotypical COA. I guess I should have added that our condo fee was also lower than most. Then again the man that ran that COA would easily make most of us here at FWF feel like spendthrifts in comparison. He certainly knew how to squeeze a nickle until the buffalo pooped. I guess I just didn't know how good I had it when I lived in that building. It probably is very different there anyway as I can't imagine that man will actually celebrate 50 years at the same employer next year.

BrlDsguise, while I don't find it surprising that you don't prepay a roof contractor, but you don't put money away in your budget for the eventuality of needed roof repairs/replacement? A COA pressing a special assessment for a new roof is equal to a homeowner that needs to pull out the credit card to keep his living room dry.

BrlDsguise said: Each condo owner needs to put money away in their budget for the day a major repair is needed. For whatever reasons most seem to want to think of themselves as renters who have a fixed monthly costs (at least for a year when a new budget is approved) and don't want to hear about a new roof being needed.

Why would you want to turn extra money over to your condo association when you could just be banking it in a reserve fund that would go to you if you sell the condo and it wasn't needed? The real estate market isn't efficient enough to price the value of the reserve fund into the value of a unit.That's exactly right. In an association, however, one of the issues often has to do with the fact that certain common area maintenance happens to be of great value to certain people and of very limited to no value to others. For instance, if you have several condo buildings and one of them needs an expensive roof, the owners of the other buildings wouldn't be all that happy with a special assessment to pay for it because it doesn't benefit them. Likewise, if tennis courts need to be resurfaced, people who use them on a regular basis would obviously push for the repairs a lot more than wheelchair confined 90 year olds for whom it is a waste of money.

Further, one of the reasons that people do purchase condos as opposed to SFR's is because they don't want to have the headache of worrying about maintenance. Instead, they prefer paying their monthly dues and having the association taking care of all the common area maintenance items. It is also impractical for condo purchasers to conduct their own independent inspection of all the common area maintenance items to determine if some of the items will have to be replaced soon at a substantial cost or not. So, they want to be able to rely on the association to ensure that it has sufficient funds to take care of the vast majority of maintenance items.

Hence, because of these differences in association dynamics, passing special assessments can often be difficult, time consumming and controversial. That's one of several reasons that for projects like that frequent/substantial special assessments are not the preferred method of paying for them.

Our condo association has usually one assessment each year. Although with them it means doubling your monthly common charges. I've suggested at the board meetings that instead we raise the common charges by about 8%, and do away with the assessments. Usually I just get blank stares, or "Oh it'll drive the buyers away, because the common charges will be higher."

I got reimbursed for a Hurricane Wilma Special assessment for repairs and cleanup from Allstate.

To the two people claiming to have purchased coverage for this for the $10 and $12 mentioned -- you aren't buying what the OP wants, and the price should make that obvious.

You are buying coverage that pays your portion of a "special assessment" that's assessed to pay for a covered event. For example a water main breaks and requires substantial repair and replacement of pipes and damaged common area. To pay for these repairs the association has a special assessment. The water main breaking was the covered event (more than likely), so the coverage would pay your portion of the assessment.

Otherwise YOUR standard policy is likely to only pay out if your unit was damaged and required repairs.

If your condo association maintains proper insurance, adding the cost of that into their dues, it should NEVER be necessary to have a special assessment due to a covered event. The building/association policy would pay out for the necessary repairs, they wouldn't be collecting the amount through an assessment. That's why you can buy this "coverage" for so cheap -- it's never going to be used.

The OP is looking for coverage against assessments due to other things -- i.e. not enough occupied units for dues to cover operational costs.

Cheap insurance options are cheap for a reason. They aren't giving you something for nothing...

SlimTim said: For us, even knowing there recently had been such an assessment was a huge red flag, because we assumed it would happen again every time every component was due for major renovation or replacement.See, I actually like purchasing condos right after major special assessments, assuming, of course, that the HOA history shows that it doesn't happen often. The vast majority of the condo complexes that I've seen have special assessments about once every 10-15 years and those are generally associated with the need to address some pretty major/expensive issues. Hence, in my experience, purchasing a condo right after a special assessment is quite likely to insulate you from any other special assessments for about 10 or so years AND you get the benefit of recently completed major renovations.