Assessments receivable insurance covers situations where:

• A. The board needs extra funds for a new project.
• B. The association cannot collect assessments after a covered loss, such as a fire.
• C. The association wants to insure its physical assets against theft.
• D. Members fail to pay but the association still receives funds.

Answer: (B)

Assessments receivable insurance is designed to protect the association against the loss of expected assessment revenue when a covered event prevents the collection of those assessments. If a disaster like a fire occurs, owners may be unable to pay or the association may be unable to enforce payment, so the policy can reimburse the association for the portion of assessments that would have been collected but wasn’t due to the covered loss. This helps the budget stay afloat after a casualty that disrupts members’ finances or ability to pay.

The other scenarios don’t fit because this coverage isn’t about obtaining extra funds for new projects, nor is it about insuring physical assets against theft. It also isn’t relevant when members simply don’t pay but the association still receives funds—there’s no unrecoverable receivable in that case, so insurance isn’t triggered.