33-1253

33-1253. Insurance

A. Commencing not later than the time of the first conveyance of a unit to a person
other than a declarant, the association shall maintain, to the extent reasonably
available, both:

1. Property insurance on the common elements insuring against all risks of direct
physical loss commonly insured against or, as determined by the board of directors
against fire and extended coverage perils. The total amount of insurance after
application of any deductibles shall be not less than eighty per cent of the actual cash
value of the insured property at the time the insurance is purchased and at each renewal
date, exclusive of land, excavations, foundations and other items normally excluded from
property policies.

2. Liability insurance in an amount determined by the board of directors but not
less than any amount specified in the declaration, covering all occurrences commonly
insured against for death, bodily injury and property damage arising out of or in
connection with the use, ownership or maintenance of the common elements.

B. To the extent available, the insurance maintained under subsection A, paragraph
1 of this section, if determined by the board, includes the units or any portion of those
units but need not include improvements and betterments installed by unit owners or the
personal property of unit owners.

C. If the insurance described in subsection A of this section is not reasonably
available, the association promptly shall cause notice of that fact to be hand-delivered
or sent prepaid by United States mail to all unit owners. The declaration may require
the association to carry any other insurance, and the association in any event may carry
any other insurance it deems appropriate to protect the association or the unit owners.

D. Insurance policies carried pursuant to subsection A of this section shall
provide the following:

1. Each unit owner is an insured person under the policy with respect to liability
arising out of his interest in the common elements or membership in the association.

2. The insurer waives its right to subrogation under the policy against any unit
owner or members of his household.

3. No act or omission by any unit owner, unless acting within the scope of his
authority on behalf of the association, will void the policy or be a condition to
recovery under the policy.

4. If, at the time of a loss under the policy, there is other insurance in the name
of a unit owner covering the same property covered by the policy, the association's
policy provides primary insurance.

E. Any loss covered by the property policy under subsection A, paragraph 1 and
subsection B of this section shall be adjusted with the association, but the insurance
proceeds for that loss are payable to any insurance trustee designated for that purpose,
or otherwise to the association, and not to any mortgagee or beneficiary under a deed of
trust. The insurance trustee or the association shall hold any insurance proceeds in
trust for unit owners and lienholders as their interests may appear. Subject to the
provisions of subsection H of this section, the proceeds shall be disbursed first for the
repair or restoration of the damaged property, and unit owners and lienholders are not
entitled to receive payment of any portion of the proceeds unless there is a surplus of
proceeds after the property has been completely repaired or restored, or the condominium
is terminated.

F. An insurance policy issued to the association does not prevent a unit owner from
obtaining insurance for his own benefit.

G. An insurer that has issued an insurance policy under this section shall issue
certificates or memoranda of insurance to the association and, on written request, to any
unit owner, mortgagee or beneficiary under a deed of trust. The insurer issuing the
policy shall not cancel or refuse to renew it until thirty days after notice of the
proposed cancellation or nonrenewal has been mailed to the association, each unit owner
and each mortgagee or beneficiary under a deed of trust to whom a certificate or
memorandum of insurance has been issued at their respective last known addresses.

H. Any portion of the condominium for which insurance is required under this
section which is damaged or destroyed shall be repaired or replaced promptly by the
association unless any of the following apply:

1. The condominium is terminated.

2. Repair or replacement would be illegal under any state or local health or safety
statute or ordinance.

3. Eighty per cent of the unit owners, including every owner of a unit or allocated
limited common element which will not be rebuilt, vote not to rebuild.

I. The cost of repair or replacement in excess of insurance proceeds and reserves
is a common expense. If the entire condominium is not repaired or replaced:

1. The insurance proceeds attributable to the damaged common elements in proportion
to their common element interests or as otherwise provided in the declaration shall be
used to restore the damaged area to a condition compatible with the remainder of the
condominium.

2. The insurance proceeds attributable to units and allocated limited common
elements which are not rebuilt shall be distributed in proportion to their common element
interests or as otherwise provided in the declaration to the owners of those units and
the owners of the units to which those limited common elements were allocated, or to
lienholders as their interests may appear.

3. The remainder of the proceeds shall be distributed to all the unit owners or
lienholders as their interests may appear in proportion to the common element interests
of all the units.

J. If the unit owners vote not to rebuild any unit, that unit's allocated interests
are automatically reallocated on the vote as if the unit had been condemned under section
33-1206, subsection A, and the association promptly shall prepare, execute and record an
amendment to the declaration reflecting the reallocations.

K. Notwithstanding the provisions of subsections H, I and J of this section,
section 33-1228 governs the distribution of insurance proceeds if the condominium is
terminated.

L. If all units are restricted to nonresidential use, the provisions of a
subsection or paragraph of this section do not apply if the declaration, articles of
incorporation or amended bylaws contain provisions inconsistent with such subsection or
paragraph.

M. This section does not prohibit the declaration from requiring additional or
greater amounts of insurance coverage or does not prohibit the board of directors from
acquiring additonal or greater amounts of coverage as it reasonably deems appropriate.