As of August 1, 2024, a new statute—Minn. Stat. § 65A.3025—will provide Minnesota homeowners with greater clarity regarding HOA loss assessment coverage under condominium and townhouse insurance policies. This legislation, championed by Big I MN alongside the Department of Commerce and the Insurance Federation of Minnesota, standardizes how loss assessment claims are handled across different insurers, benefiting both policyholders and the insurance industry.
What is Loss Assessment Coverage?
Loss assessment coverage typically applies when an HOA assesses unit owners for expenses related to damage to common property that the HOA collectively owns. For coverage to apply, the damage must involve property types covered by the unit owner’s insurance policy and must result from a peril specified in the policy.
Currently, there is a lack of uniformity in coverage triggers across insurance providers. Some policies require that coverage be in effect on the date the loss assessment is issued, while others look to the date of the covered event. These variations often confuse policyholders and agents.
Key Provisions of Minn. Stat. § 65A.3025
The new statute outlines two scenarios for handling loss assessment claims, providing clear guidance on which policy applies:
1. Same Unit Owner on Date of Event and Assessment
If the unit owner on the date of the covered event and the date of the loss assessment is the same, the policy active on the event date will respond to the claim. Loss assessment claims and any covered property damage will be treated as a single loss for underwriting purposes.
2. Different Unit Owners on Event and Assessment Dates
When the unit owner changes between the covered event and the assessment date, the policy in force on the assessment date will cover the claim. For example, if a unit owner who purchased a property in August 2024 is assessed in October 2024 for hail damage that occurred in August 2023, that unit owner’s insurance carrier will handle the claim applying the 2024 policy.
Why This Law is Important for Policyholders
This law eliminates ambiguities, ensuring all parties—unit owners, agents, carriers, and HOAs—understand which policy is responsible for responding to claims. This clarity not only protects policyholders but also helps insurance agents advise clients more effectively and ensures proper claim processing.
Next Steps for Policyholders and Agents
For Minnesotans living in HOA communities, this law emphasizes the importance of understanding your insurance policy’s terms and coverage details. Insurance agents should familiarize themselves with the nuances of Minn. Stat. § 65A.3025 to provide accurate advice and ensure clients are adequately covered.
If you have questions about how this new statute affects your coverage, consult your insurance carrier, underwriter, or legal counsel.
By implementing this legislation, Minnesota sets a precedent for clear and fair loss assessment coverage—a win for policyholders and the insurance industry alike.
To read the full statute, and for more information, visit the MN Office of the Revisor of Statues.
For 15 years, Gavnat has been committed to ensuring policy holders are provided a fair settlement for home, multi-family, and commercial claims. To speak with a Gavnat expert about your HOA or claim, contact 763.251.8892 or email info@gavnat.com.