How much will the Loss Assessment coverage pay if each neighborhood association member is assessed $2,000?

Loss Assessment coverage typically provides financial protection for homeowners when the community or neighborhood association incurs unexpected losses that they pass on to members. In the context of this question, when neighborhood association members are assessed $2,000 each, this amount reflects the total cost each homeowner must pay due to a loss affecting the community.

The correct answer indicates that the Loss Assessment coverage will provide a maximum payout of $1,000. This typically stems from the standard limits set in many insurance policies regarding Loss Assessment coverage. Such limits are established to ensure that the insurance company can manage overall risk while still providing some level of assistance to homeowners facing unexpected assessments.

Thus, in this scenario, even though each homeowner is assessed $2,000, the coverage limit dictates how much an insured member can recover from their insurance policy. This structure is designed to encourage community members to remain proactive about assessing risks and maintaining their individual properties within the context of the larger community association.