§514B-143 
Insurance.  (a)  Unless
otherwise provided in the declaration or bylaws, the association shall purchase
and at all times maintain the following:



(1)  Property insurance:



(A)  On the common elements;



(B)  Providing coverage for special form causes
of loss; and



(C)  In a total amount of not less than the
full insurable replacement cost of the insured property, less deductibles, but
including coverage for the increased costs of construction due to building code
requirements, at the time the insurance is purchased and at each renewal date;



(2)  Commercial general liability insurance against
claims and liabilities arising in connection with the ownership, existence,
use, or management of the property in a minimum amount of $1,000,000, or a
greater amount deemed sufficient in the judgment of the board;



(3)  A fidelity bond, as follows:



(A)  An association with more than five
dwelling units shall obtain and maintain a fidelity bond covering persons,
including the managing agent and its employees who control or disburse funds of
the association, in an amount
equal to $500 multiplied by the number of units; provided that the amount of
the fidelity bond required by this paragraph shall not be less than $20,000 nor
greater than $200,000; and



(B)  All management companies that are
responsible for the funds held or administered by the association shall be
covered by a fidelity bond as provided in section 514B‑132(a)(3).  The
association shall have standing to make a loss claim against the bond of the
managing agent as a party covered under the bond; and



(4)  The board shall obtain directors and officers
liability coverage at a level deemed reasonable by the board, if not otherwise
limited by the declaration or bylaws.



(b)  If a building contains attached units, the
insurance maintained under subsection (a)(1), to the extent reasonably
available, shall include the units, the limited common elements, except as
otherwise determined by the board, and the common elements.  The insurance need
not cover improvements and betterments to the units installed by unit owners,
but if improvements and betterments are covered, any increased cost may be
assessed by the association against the units affected.



For the purposes of this section,
"improvements and betterments" means all decorating, fixtures, and
furnishings installed or added to and located within the boundaries of the
unit, including electrical fixtures, appliances, air conditioning and heating
equipment, water heaters, or built-in cabinets installed by unit owners.



(c)  If a project contains detached units, then
notwithstanding the requirement in this section that the association obtain the
requisite coverage, if the board determines that it is in the best interest of
the association to do so, the insurance to be maintained under subsection
(a)(1) may be obtained separately for each unit by the unit owners; provided
that the requirements of subsection (a)(1) shall be met; and provided further
that evidence of such insurance coverage shall be delivered annually to the
association.  In such event, the association shall be named as an additional
insured.



(d)  The board, in the case of a claim for
damage to a unit or the common elements, may:



(1)  Pay the deductible amount as a common expense;



(2)  After notice and an opportunity for a hearing,
assess the deductible amount against the owners who caused the damage or from
whose units the damage or cause of loss originated; or



(3)  Require the unit owners of the units affected to
pay the deductible amount.



(e)  The declaration, bylaws, or the board may
require the association to carry any other insurance, including workers'
compensation, employment practices, environmental hazards, and equipment
breakdown, that the board considers appropriate to protect the association, the
unit owners, or officers, directors, or agents of the association.  Flood insurance shall also be
maintained if the property is located in a special flood hazard area as
delineated on flood maps issued by the Federal Emergency Management Agency. 
The flood insurance policy shall comply with the requirements of the National
Flood Insurance Program and the Federal Insurance Administration.



(f)  Any loss covered by the property policy
under subsection (a)(1) shall be adjusted by and with the association.  The
insurance proceeds for that loss shall be payable to the association, or to an
insurance trustee designated by the association for that purpose.  The
insurance trustee or the association shall hold any insurance proceeds in trust
for unit owners and secured parties as their interests may appear.



(g)  The board, with the vote or written
consent of a majority of the owners, may require unit owners to obtain
reasonable types and levels of insurance.  The liability of a unit owner shall
include but not be limited to the deductible of the owner whose unit was
damaged, any damage not covered by insurance required by this subsection, as
well as the decorating, painting, wall and floor coverings, trim, appliances,
equipment, and other furnishings.



If the unit owner does not purchase or produce
evidence of insurance requested by the board, the directors may, in good faith,
purchase the insurance coverage and charge the reasonable premium cost back to
the unit owner.  In no event is the association or board liable to any person
either with regard to the failure of a unit owner to purchase insurance or a 
decision by the board not to purchase the insurance for the owner, or with
regard to the timing of its purchase of the insurance or the amounts or types
of coverages obtained.



(h)  The provisions of this section may be
varied or waived in the case of a project in which all units are restricted to
nonresidential use. [L 2004, c 164, pt of §2; am L 2006, c 273, §25]