When Your HOA Sends a Surprise Bill: What You Can Do (and How Insurance Can Help)

Living in a homeowners association (HOA) community can have its perks, including shared amenities, maintained common areas, and a cohesive neighborhood feel. However, homeowners can sometimes find themselves facing a special assessment, which is an unexpected fee the HOA charges when its reserves are not enough to cover major repairs, insurance increases, or other unplanned expenses.

These assessments are becoming increasingly common as maintenance costs and insurance requirements rise. They can range from a few hundred dollars to tens of thousands.

What is an HOA special assessment?

A loss assessment is a one-time charge that helps an HOA pay for a large expense outside its normal budget.

Typical reasons include:

• Major repairs such as roof or pool replacements
• Structural improvements or safety upgrades
• Covering large debts or unpaid utilities
• Meeting insurance or compliance requirements

Depending on the community’s rules, homeowners might be asked to pay the full amount at once or through installments. Either way, it is rarely a welcome surprise.

As one expert noted, “Eventually, someone has to foot the bill, and oftentimes that someone is the homeowner.”

Why HOAs Levy Special Assessments

Even well-run HOAs can face budget shortfalls. Rising costs, deferred maintenance, and unexpected damage can all strain reserve funds. Most associations employ outside professionals such as accountants and property managers, but their boards are typically made up of volunteers. These homeowners often have busy lives and may not always have the time or expertise for long-term financial planning.

When expenses outpace preparation, a loss assessments can quickly follow.

Can homeowners challenge these fees?

It is possible, but often difficult. The best time to act is before the HOA board votes. Once an assessment is approved, you typically have two options:

1. Challenge it legally if there is a valid basis in your community’s governing documents.
2. Work to elect new board members who align with your financial priorities.

Even if you plan to dispute the fee, it is important to continue paying while the issue is being resolved. Failing to do so could lead to fines, added interest, or even a lien against your property.

Protect Yourself With the Right Insurance Coverage

This is where your insurance can make a meaningful difference.

If you live in a condo, townhouse, or HOA community, you can add an optional coverage called Loss Assessment to your policy. This coverage helps pay your share of a special assessment when it is tied to a covered loss such as fire, wind, or another insured event affecting shared property.

For example, if your HOA’s master insurance policy does not fully cover storm damage to the building’s roof, the HOA may levy an assessment to make up the difference. Loss Assessment coverage can help pay your portion and reduce the financial impact.

Why You Should Tell Your Insurance Agent You Live in an HOA

Not all homeowners realize this coverage exists or how affordable it can be. By letting your insurance agent know that you are part of an HOA, they can:

• Confirm that Loss Assessment coverage is included on your policy
• Compare limits to fit your specific needs and community risks
• Add the protection, often for just a small increase in premium

It is a simple step that could prevent a major financial setback later.

Assessments are a reality of HOA living, but they do not have to derail your budget. Staying informed, understanding your rights, and ensuring you have Loss Assessment coverage are key ways to stay prepared.

A little foresight now can make a big difference when unexpected costs arise.

Contact Schaub Insurance Agency for expert guidance. Schedule an appointment today at: https://www.schaubinsurance.com/customer-service