Assessments needed to cover rising insurance premiums

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Dear Poliakovs,

I recently received notice from my condominium association that there is a $500,000 shortfall in the budget related to our insurance premiums. From next month, all homeowners will be charged a certain percentage to cover this shortfall. This doesn’t quite seem right to me as we have all been paying membership fees monthly as expected – how can they now come back to us to charge us more than they charged us to begin with? Am I wrong with this? Seems like a scam to me.

Signed, RB

Dear RB,

Due to a number of market factors, including the Surfside tragedy (Champlain Towers South collapse), many insurers left the Florida market and the cost of insurance rose 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 surprising at all (I have heard numerous reports of similar increases). The association has a legal obligation to carry insurance and they have to pay for this premium increase somehow – the only solution is to raise your ratings. This can be achieved in one of two ways. Either the board can change the annual budget and collect increased assessments for the rest of the year (which seems to be happening in your case), or the board can pass a special assessment to raise enough funds to cover the shortfall.

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