Assessments required to cover increased insurance premiums | Business Insurance

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Dear Poliakoffs,

I recently received notice from my condominium association that there is a $500,000 budget shortfall related to our insurance premiums. Starting next month, all unit owners will be charged a certain percentage to cover this shortfall. This does not seem entirely correct to me, since we have all paid the monthly fees of the association as expected. How can they now charge us more than they charged us in the beginning? Am I wrong about this? It seems like a scam to me.

Signed, RB

Dear RB,

Due to a number of market factors, including the Surfside tragedy (the collapse of Champlain Towers South), many insurers left the Florida market and the cost of insurance increased dramatically. Many of our clients have reported premium increases of hundreds of thousands of dollars. So if your insurance renews in the summer, what you described is not at all surprising (I’ve heard multiple reports of similar increases). The association is legally required to take out insurance and has to pay for the increased premium in some way; the only solution is to increase your fees. This can be accomplished in one of two ways. The board can modify the annual budget and raise higher contributions for the rest of the year (which is what seems to be happening in your case), or it can pass a special assessment to raise enough funds to cover the shortfall.

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