Loss assessment coverage is a part of a condo owner's policy (HO-6) that pays the owner's share when the association charges all unit owners a special assessment for a covered loss that exceeds the master policy limits or falls under its deductible.
It matters because without it, that assessment comes straight out of the owner's pocket.
Example: a covered clubhouse fire costs $80,000 more than the association's master policy pays, so the association assesses each of 40 owners $2,000. Loss assessment coverage pays the owner's $2,000 share, up to its limit.
Related: master policy, deductible. See the condo insurance overview.