An insured member of a neighborhood association has been assessed a portion of a loss at $2,000. How much will the Loss Assessment additional coverage of the insured's homeowners liability policy pay?

An insured member of a neighborhood association has been assessed a portion of a loss at $2,000. How much will the Loss Assessment additional coverage of the insured's homeowners liability policy pay?

• A. Up to $500
• B. Up to $1,000
• C. Up to $1,500
• D. Up to $2,000

Answer: (B)

In a homeowners policy, the Loss Assessment coverage is designed to help homeowners cover assessments levied by a homeowners association due to losses that the association has incurred. This coverage is crucial for homeowners who might face unexpected financial burdens from such assessments. In this scenario, the insured member has been assessed $2,000 for a loss. However, the coverage provided for Loss Assessment under standard homeowners liability policies typically has a limit. Generally, this limit is up to $1,000, meaning that while the total assessed amount is higher, the insurance will only reimburse a maximum of $1,000 toward that assessment. Therefore, the correct answer reflects this limitation of the coverage, indicating that even though the individual assessment was $2,000, the policy will pay up to $1,000 under Loss Assessment coverage. Understanding these limits is crucial when discussing homeowners insurance because it prepares policyholders for potential financial exposures they may face.

In a homeowners policy, the Loss Assessment coverage is designed to help homeowners cover assessments levied by a homeowners association due to losses that the association has incurred. This coverage is crucial for homeowners who might face unexpected financial burdens from such assessments.

In this scenario, the insured member has been assessed $2,000 for a loss. However, the coverage provided for Loss Assessment under standard homeowners liability policies typically has a limit. Generally, this limit is up to $1,000, meaning that while the total assessed amount is higher, the insurance will only reimburse a maximum of $1,000 toward that assessment.

Therefore, the correct answer reflects this limitation of the coverage, indicating that even though the individual assessment was $2,000, the policy will pay up to $1,000 under Loss Assessment coverage. Understanding these limits is crucial when discussing homeowners insurance because it prepares policyholders for potential financial exposures they may face.