M.M. from Sarasota County, Florida writes:
Dear Mister Condo,
Because of not having Reserves, a sudden mega increase in insurance premiums has caused a special assessment to be levied, as well as a large increase in assessments for coming year. Should the Board have offset the increase by trimming expenditures and delaying unnecessary maintenance? For example, villas are repainted every 3 years even though they do not look as though it’s needed. Sprinklers are allowed to run even on rainy days. Trees are trimmed year-round.
Mister Condo replies:
M.M., while no one (including your Board) enjoys a Special Assessment, there are times when they are simply unavoidable. Please do not confuse an increase to insurance premiums with Reserve Fund contributions. Insurance premiums are not a Reserve Fund item. Without knowing exactly how much insurance rates might jump from year to year, it is difficult for the Board to budget properly. Florida isn’t alone in seeing major spikes in insurance costs so this is a matter that effects every condo and HOA in the country. The budget needs to be balanced but services need to continue or the condo can fall into ill repair, which benefits no one. Deferring maintenance is a slippery slope and I do not recommend being penny-wise and pound foolish. You have elected association members to employ good business judgment while running the association. Increasing common fees and assessments is just that in these current economic times where runaway inflation is making everything more expensive. All the best!
2 thoughts on “Spiked Insurance Premiums Catches Condo Board Off Guard ￼”
Look at the reserve study to determine how often the painting is recommended. If the timeframe is more than 3 years, have a positive discussion with the board and make the suggestion that you follow the reserve recommendations to ease the burden and strengthen reserves if possible!
I wasn’t sure what was meant by ‘not having reserves,’ if it was intended to mean concerning insurance, or there are no reserves at all. Yikes, if there are none. You could look to defer some cosmetic items, but not tree trimming, that is for safety, and the worst thing is for a complex to use deferring maintenance to “save” money on care on care of the buildings esp elevators, boilers, roofs, alarm system, driveway, walkways. Our sprinkler system has sensors, and they do not run on rainy days. Your assn could have a consult with your insurance agency about the complex’s risk profile, claim history, etc. Find an agency willing to go to bat for your assn if they are limp wristed about helping you get the best rates or have no good counsel for you. Also see if the premium can be negotiated down with the underwriter if there have not been claims. But I also would be careful to maintain good coverage.