THE ASSOCIATION’S DEDUCTIBLE:
As a member of the Board of Directors you may be faced with an insurance claim. Nearly every policy has a deductible which is the portion of the loss that is “out of pocket” to the association. The deductible you decide upon should be something that wouldn’t put the association in financial hardship though there are options for how you handle recovering/funding the deductible. You have three options:
1. As a common expense: simply paid out of the operating or reserve account
- Assessed against the owner(s) who caused the damage or from where the loss originated.
- Require the unit owner(s) of the units affected to pay a prorated or shared portion of the deductible.
Before you decide to use options 2 or 3 consult with your attorney as improper use of these could result in a lawsuit. Though don’t shy away from these either as the association’s budget may not be in the situation to “absorb” the loss and may otherwise need to.
If you’re worried about your community members being able to cover the cost, don’t be. Your agent should have advised you to inform your community of what a unit owner should have to pick up where the association leaves off. This includes the deductible as a special assessment which is coverage that can be added to most personal policies for a few dollars.