We insure a large condominium complex with a building limit of $10 million. The windstorm deductible is 2 percent per occurrence ($200,000). We are attempting to write the individual unit-owners' policies. Since they are not responsible for any of the real property in their units, there is no need to sell them coverage A.

The unit-owners have also expressed concern over the large windstorm deductible. Under the terms of the association agreement, they would be responsible for payment of the deductible. We've told them that loss assessment coverage will take care of this. However, we are concerned that loss assessment coverage does not apply if the unit-owner does not carry any coverage A. We are also concerned that the policy limits loss assessment coverage to $1,000.

What else can be done?

Puerto Rico Subscriber

A condominium unit-owner does not have to carry coverage A in order for loss assessment coverage to apply. The coverage applies as long as the loss is caused by a coverage A peril. Because wind is a coverage A peril, a unit-owner's loss assessment coverage would apply for his or her share of the master policy's 2 percent windstorm deductible.

As you mentioned, the coverage contained in the policy is limited to $1,000 per assessment. If more loss assessment coverage is desired, it may be purchased on form HO 04 35 10 00.

However, it should be pointed out that even if additional coverage is purchased, the policy will still only pay a maximum of $1,000 toward a unit-owner's share of any master policy deductible. In the case of this association—with a windstorm deductible of $200,000—if there aren't at least 200 unit-owners in the complex, all of whom have the $1,000 coverage, the unit-owners need to make some provision for covering any assessment in excess of what each unit-owner's policy would cover.

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