Our question concerns application of loss assessment in the 1984 HO-6. Many of our insureds have a separate “windstorm” deductible, which is a percentage deductible subject to a $1,000 minimum. This windstorm deductible is separate from the standard $250 deductible.

Following Hurricane Georges, we have had many assessment claims, and have been debating with the company whether the windstorm deductible or the regular deductible should apply to these claims, and what date to use for the loss assessment coverage date of loss.

Our argument for the lower deductible is based on the fact that the policy wording states: “We will pay up to $1,000 for your share of any loss assessment charged during the policy period against you by a corporation or association of property owners.” We have therefore used the date of the assessment as the date of loss. We also think that this is an assessment claim, and not a hurricane claim, and therefore the lower deductible should apply.

The insurer thinks that the assessment provision is just poorly worded, and that the date of the hurricane is the date of the assessment claim. The insurer also thinks the windstorm deductible should apply to the assessment claim.

What are your thoughts?

Virgin Islands Subscriber

The coverage for loss assessment is triggered by the actual presentation of the assessment to the insured, not the date of a covered loss to the commonly owned property. In fact, in the 1991 edition of the HO-6 this provision is added: “Condition 1. Policy Period, under SECTIONS I and II CONDITIONS, does not apply to this coverage.”

This language clarifies the 1984 wording in that the loss that results in the assessment need not occur during the policy term in which the assessment is made. The policy that is in force when the assessment is made, and not the one in force when the damage to commonly owned property occurred, is the one that responds.

 Application of the deductible would therefore seem to be linked to the assessment claim itself, and not the peril that caused the loss. To apply the windstorm deductible again would appear to be penalizing the insured twice for the same loss. What if the insured moved and was no longer subject to a separate windstorm deductible? The new insurer could not arbitrarily apply such a deductible if one did not exist.

We are of the opinion that the loss assessment claim is a loss in and of itself, and should be subject to the standard policy deductible.

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