State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_47F > GS_47F-3-113

§47F‑3‑113.  Insurance.

(a)        Commencing notlater than the time of the first conveyance of a lot to a person other than adeclarant, the association shall maintain, to the extent reasonably available:

(1)        Property insuranceon the common elements insuring against all risks of direct physical losscommonly insured against including fire and extended coverage perils. The totalamount of insurance after application of any deductibles shall be not less thaneighty percent (80%) of the replacement cost of the insured property at thetime the insurance is purchased and at each renewal date, exclusive of land,excavations, foundations, and other items normally excluded from propertypolicies; and

(2)        Liability insurancein reasonable amounts, covering all occurrences commonly insured against fordeath, bodily injury, and property damage arising out of or in connection withthe use, ownership, or maintenance of the common elements.

(b)        If the insurancedescribed in subsection (a) of this section is not reasonably available, theassociation promptly shall cause notice of that fact to be hand‑deliveredor sent prepaid by United States mail to all lot owners. The declaration mayrequire the association to carry any other insurance, and the association inany event may carry any other insurance it deems appropriate to protect theassociation or the lot owners.

(c)        Insurance policiescarried pursuant to subsection (a) of this section shall provide that:

(1)        Each lot owner is aninsured person under the policy to the extent of the lot owner's insurableinterest;

(2)        The insurer waivesits right to subrogation under the policy against any lot owner or member ofthe lot owner's household;

(3)        No act or omissionby any lot owner, unless acting within the scope of the owner's authority onbehalf of the association, will preclude recovery under the policy; and

(4)        If, at the time of aloss under the policy, there is other insurance in the name of a lot ownercovering the same risk covered by the policy, the association's policy providesprimary insurance.

(d)        Any loss covered bythe property policy under subdivision (a)(1) of this section shall be adjustedwith the association, but the insurance proceeds for that loss are payable toany insurance trustee designated for that purpose, or otherwise to theassociation, and not to any mortgagee or beneficiary under a deed of trust. Theinsurance trustee or the association shall hold any insurance proceeds in trustfor lot owners and lienholders as their interests may appear. Subject to theprovisions of subsection (h) of this section, the proceeds shall be disbursedfirst for the repair or restoration of the damaged property, and lot owners andlienholders are not entitled to receive payment of any portion of the proceedsunless there is a surplus of proceeds after the property has been completelyrepaired or restored, or the planned community is terminated.

(e)        An insurance policyissued to the association does not prevent a lot owner from obtaining insurancefor the lot owner's own benefit.

(f)         An insurer thathas issued an insurance policy under this section shall issue certificates ormemoranda of insurance to the association and, upon written request, to any lotowner, mortgagee, or beneficiary under a deed of trust. The insurer issuing thepolicy may not cancel or refuse to renew it until 30 days after notice of theproposed cancellation or nonrenewal has been mailed to the association, eachlot owner, and each mortgagee or beneficiary under a deed of trust to whomcertificates or memoranda of insurance have been issued at their respectivelast known addresses.

(g)        Any portion of theplanned community for which insurance is required under subdivision (a)(1) ofthis section which is damaged or destroyed shall be repaired or replaced promptlyby the association unless (i) the planned community is terminated, (ii) repairor replacement would be illegal under any State or local health or safetystatute or ordinance, or (iii) the lot owners decide not to rebuild by aneighty percent (80%) vote, including one hundred percent (100%) approval ofowners assigned to the limited common elements not to be rebuilt. The cost ofrepair or replacement in excess of insurance proceeds and reserves is a commonexpense. If any portion of the planned community is not repaired or replaced,(i) the insurance proceeds attributable to the damaged common elements shall beused to restore the damaged area to a condition compatible with the remainderof the planned community, (ii) the insurance proceeds attributable to limitedcommon elements which are not rebuilt shall be distributed to the owners of thelots to which those limited common elements were allocated, or to lienholders,as their interests may appear, and (iii) the remainder of the proceeds shall bedistributed to all the lot owners or lienholders, as their interests mayappear, in proportion to the common expense liabilities of all the lots.Notwithstanding the provisions of this subsection, G.S. 47F‑2‑118(termination of the planned community) governs the distribution of insuranceproceeds if the planned community is terminated.

(h)        The provisions ofthis section may be varied or waived in the case of a planned community all ofwhose lots are restricted to nonresidential use. (1998‑199, s. 1.)