The long-awaited sequel to Part One, this blog addresses the other deductible dilemma associations are facing.  The dreaded wind and hail deductible.

Under this scenario, imagine a large hail storm whips through the Denver area, causing significant damage to the roofs in your community.  As a result, all of the roofs in the community must be replaced.  Let’s say your association’s wind and hail deductible amounts to $250,000.  Because of the size of the deductible, the association must impose a special assessment against all owners.  For purposes of this example, let’s say that there are 100 units in the community, and therefore, the special assessment per unit would be in the amount of $2,500.  Many owners may not have that kind of money readily available to pay such an assessment.

However, not all hope is lost.  The loss assessment coverage under the owner’s HO-6 policy may provide coverage for the owner to pay the assessment, less his own HO-6 deductible.  Loss assessment coverage comes into play when the association imposes an association-wide assessment on all owners to cover something that could have been covered by the association’s insurance, but was not (such as a wind and hail deductible).

Typical HO-6 policies include $1,000 of loss assessment coverage, which may be able to be increased.  However, some carriers will still limit the amount of coverage to $1,000 if the loss assessment coverage is being used to cover the association’s deductible.  As such, owners should be advised to consult with their own insurance agents to make sure their HO-6 policies are adequate.

As a side note, some declarations may limit the amount of the Association’s deductible.  When it comes to wind and hail deductibles, therefore, it is important to check your declaration to make sure your deductible is within any limits that may be outlined in your declaration.  If not, it may be necessary to amend your declaration to allow greater flexibility for the association in determining the deductibles on its policies.

For more information or if you have questions, please call a Altitude Community Law attorney at 303.432.9999

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