Using Reserves for Insurance Premiums? By Melissa Esham 8/22/2016 The trees got sick. Rose bushes were eaten by beetles. The self-closing and locking pool gate is not self-closing or locking. The 911 phone isn’t dialing 911. A bottle of red wine broke in the elevator. A raccoon chewed through the HVAC’s insulation. The town required a new type of no-trespassing signs in order to enforce parking. The operating budget took a hit and as a manager or Board member, these were all easily solved crisis, except… the budget was tight this year. The insurance agent has just sent over the annual insurance renewal. There is not enough money in the operating budget to cover the bill. Dues are not coming in for another month and a half. Are you sweating yet? That reserve fund is just sitting there with plenty of money for future maintenance and repairs. It is not funded to 100% but there are no projects in the study for another 2 years. Is this a viable option? NO! 1. Ask if your carrier has payment options. 2. Ask your agent if financing is available for the policy. If you are left with no alternative, make sure you have a procedure and a plan to implement. Things the procedure should include: How many Board members need to give written permission to move the money from a reserve account to an operating account. A date specific plan of when the money will be returned to the reserve fund. The specific reason for the money to be moved. A budget recommendation on how to avoid this complication in the future. Approve the action inside the next Board meeting and make sure it is recorded in the minutes. It best to have this plan ready and in place prior to actually needing it and make sure it is generic enough that it can cover any over budget expenditure. Thanks for reading.