The Hidden Risk Of Timeshares

Our Comments: One huge risk that you take on when purchasing a timeshare is the cost of repairing the facility if there is major damage to it (something you don't carry when you stay at a hotel or rent a condo). Of course insurance should pay for it, but it rarely works out to be that easy. And if you have to pay special assessment fees for damage, your losses will increase dramatically. Just one more issue that should make you think long and hard before buying:

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With no insurance settlement in sight for the $20 million in damages from Hurricane Ivan, Morritts Tortuga Club and Resort has gone into arbitration with its insurance company, Lloyds of London...

A special assessment fee of US$5.74 million had been charged to timeshare owners to cover the 15 percent deductible on the $20 million claim to the insurance company. Although most of those fees have been paid, numerous owners are claiming that actually the fee is not their responsibility as part of their purchase agreement and should be paid by the developer.

Furthermore, it was the developer's responsibility to carry adequate insurance coverage. And since the industry standard throughout the Caribbean is 5 percent, this is a sign the property may be under-insured, which they say is a clear example of financial mismanagement...

According to some timeshare owners, the attorneys for Morritts Tortuga have said any substantial legal fees that it accrues will be passed on to the timeshare owners in another special assessment fees... Entire Article