A condo development suffered a severe fire damaging 8 or 9 Units. Five were a total loss with the remaining suffering smoke and water damage. The building claim covered under the Association's policy is in excess of 4 million.
Here is the question. The Ins Co at the time of the loss decided to nonrenew. Rebuilding of the damaged units is now underway, and the Association's broker had to find a new insurance company. Not easy.
The Association's premium before the fire was around $60,000.00. By the way, this covers 68 units. The new premium being charged by a company willing to take the risk with an open claim and ongoing construction is charging a premium of $336,000.00.
Each unit will now be assessed to cover the policy premium for this year between $3,500.00 to $4,300.00.
So, we have a covered claim of fire-would each of the unit owners be able to put in a claim under the Loss Assessment Coverage of their HO 6 policies to cover the one time assessment of the monumental policy premium increase?
New York Subscriber
The loss assessment coverage applies when the assessment is made as a result of direct loss to property caused by a covered peril. An increase in premium because the association had to change carriers is not a triggering peril. The nonrenewal could have been in part because of the loss, but there may have been other factors as well. Loss assessment applies if the unit-owners are assessed because of direct damage to the property. For example, if they had been assessed because the fire damage exceeded the limits of the policy and there was still money needed for repair, that assessment would have been covered. However, an increase in premium at renewal is not.