Loss Assessment Coverage

Our Insurance Has a Large Deductible

• The Villas at the Boulders carries a community insurance policy with State Farm

• Because we are in Colorado, where wind and hail are prevalent, our policy carries a 5% wind/hail deductible

• Our total insured property value is approximately $50 million

• That means our deductible on any hail event could be as high as $2.5 million!

How the Deductible Actually Works

• The deductible applies per building, not to the whole community at once

• Each building is insured at roughly $800,000, so the deductible per damaged building is about $40,000

• State Farm pays only the damage above that threshold — the HOA is responsible for the rest

• The Association has no magic source of money, it is just us, the owners. If there is a $40,000 bill the owners have to pay it

That Means a Special Assessment

• When a hail event damages multiple buildings, the board would have to levy a special assessment to cover the deductible shortfall

• Our CC&Rs allow the board to levy this either against all 124 units or only against owners in the affected buildings

• A 10-building hail event could produce a shortfall of roughly $400,000

• Depending on how the board levies the assessment, your share could range from $3,200 (community-wide) to $20,000 (building-specific)

• These assessments can come with little warning and are typically due promptly

Loss Assessment Coverage Protects You

• A standard HO-6 homeowner policy includes loss assessment coverage

• This coverage pays your share of a special assessment levied by the HOA (for a covered loss) — up to your policy limit

• Loss assessment coverage is among the least expensive coverages

• Coverage limits of $10,000 are typical, but we recommend you carry $25,000 or more because it is inexpensive 

• Without it, a single hail storm could mean a surprise four- or five-figure bill