Are special assessments covered by condo insurance?

Only special assessments resulting from covered perils are included. Assessments for maintenance or improvements typically aren't covered.

Condo insurance usually covers special assessments if they arise from a peril that is already covered under your insurance policy. For example, if there is a fire or windstorm that damages the common areas of the condominium building, the insurance may help cover your portion of the special assessment to repair those damages. However, it's important to note that not all types of special assessments will be covered. Those that are imposed for routine maintenance or for improvements to the common areas typically aren't covered by insurance. This means if your condo association decides to upgrade the landscaping or install new roofing that isn't due to damage from a covered event, your insurance policy won't cover those costs. Always check with your insurance provider to understand what your policy includes regarding special assessments.

Imagine you live in a condominium where the building's roof gets severely damaged by a hurricane. After the storm, the condo association determines that each unit owner must pay a special assessment to cover the costs of repairing the roof. Since damage from hurricanes is a covered peril in your condo insurance policy, your insurance may cover your share of this special assessment. On the other hand, if the association votes to upgrade the building's lobby for aesthetic reasons, the associated special assessment for this improvement would likely not be covered by your insurance.

To ensure you are well-prepared, review your condo insurance policy to understand what perils are covered and whether it includes any provisions for special assessments. This will help you avoid surprises if an assessment arises. Additionally, consider discussing your coverage needs with your insurance agent to determine if an additional rider or special assessment coverage is available and suits your needs. Being proactive about understanding your insurance policy can save you unexpected expenses in the long run.