| (9) |
| (a) |
This Subsection (9) applies to property insurance required under Subsection (3)(a). |
| (b) |
The total amount of coverage provided by blanket property insurance or guaranteed replacement cost insurance may not be less than 100% of the full replacement cost of the insured property at the time the insurance is purchased and at each renewal date, excluding:
| (i) |
items normally excluded from property insurance policies; and |
| (ii) |
unless otherwise provided in the declaration, any commercial condominium unit in a mixed-use condominium project, including any fixture, improvement, or betterment in a commercial condominium unit in a mixed-use condominium project. |
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| (c) |
Property insurance shall include coverage for any fixture, improvement, or betterment installed at any time to a unit or to a limited common area associated with a unit, whether installed in the original construction or in any remodel or later alteration, including a floor covering, cabinet, light fixture, electrical fixture, heating or plumbing fixture, paint, wall covering, window, and any other item permanently part of or affixed to a unit or to a limited common element associated with a unit. |
| (d) |
Notwithstanding anything in this section and unless otherwise provided in the declaration, an association of unit owners is not required to obtain property insurance for a loss to a unit that is not physically attached to:
| (ii) |
a structure that is part of a common area or facility. |
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| (e) |
Each unit owner is an insured person under a property insurance policy. |
| (f) |
If a loss occurs that is covered by a property insurance policy in the name of an association of unit owners and another property insurance policy in the name of a unit owner:
| (i) |
the association's policy provides primary insurance coverage; and |
| (ii) |
notwithstanding Subsection (9)(f)(i) and subject to Subsection (9)(g):
| (A) |
the unit owner is responsible for the deductible of the association of unit owners; and |
| (B) |
building property coverage, often referred to as coverage A, of the unit owner's policy applies to that portion of the loss attributable to the policy deductible of the association of unit owners. |
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| (g) |
| (i) |
As used in this Subsection (9)(g) and Subsection (9)(j):
| (A) |
"Covered loss" means a loss, resulting from a single event or occurrence, that is covered by a property insurance policy of an association of unit owners. |
| (B) |
"Unit damage" means damage to a unit or to a limited common area or facility appurtenant to that unit, or both. |
| (C) |
"Unit damage percentage" means the percentage of total damage resulting in a covered loss that is attributable to unit damage. |
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| (ii) |
A unit owner who owns a unit that has suffered unit damage as part of a covered loss is responsible for an amount calculated by applying the unit damage percentage for that unit to the amount of the deductible under the property insurance policy of the association of unit owners. |
| (iii) |
If a unit owner does not pay the amount required under Subsection (9)(g)(ii) within 30 days after substantial completion of the repairs to the unit or limited common areas and facilities appurtenant to that unit, an association of unit owners may levy an assessment against the unit owner for that amount. |
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| (h) |
An association of unit owners shall set aside an amount equal to the amount of the association's property insurance policy deductible or, if the policy deductible exceeds $10,000, an amount not less than $10,000. |
| (i) |
| (i) |
An association of unit owners shall provide notice in accordance with Section 57-8-42 to each unit owner of the unit owner's obligation under Subsection (9)(g) for the association's policy deductible and of any change in the amount of the deductible. |
| (ii) |
| (A) |
An association of unit owners that fails to provide notice as provided in Subsection (9)(i)(i) is responsible for the portion of the deductible that the association of unit owners could have assessed to a unit owner under Subsection (9)(g), but only to the extent that the unit owner does not have insurance coverage that would otherwise apply under this Subsection (9). |
| (B) |
Notwithstanding Subsection (9)(i)(ii), an association of unit owners that provides notice of the association's policy deductible, as required under Subsection (9)(i)(i), but fails to provide notice of a later increase in the amount of the deductible is responsible only for the amount of the increase for which notice was not provided. |
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| (iii) |
The failure of an association of unit owners to provide notice as provided in Subsection (9)(i)(i) may not be construed to invalidate any other provision of this section. |
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| (j) |
If, in the exercise of the business judgment rule, the management committee determines that a covered loss is likely not to exceed the property insurance policy deductible of the association of unit owners and until it becomes apparent the covered loss exceeds the deductible of the property insurance of the association of unit owners and a claim is submitted to the property insurance insurer of the association of unit owners:
| (i) |
a unit owner's policy is considered the policy for primary coverage for a loss occurring to the unit owner's unit or to a limited common area or facility appurtenant to the unit; |
| (ii) |
the association of unit owners is responsible for any covered loss to any common areas and facilities; |
| (iii) |
a unit owner who does not have a policy to cover the damage to that unit owner's unit and appurtenant limited common areas and facilities is responsible for that damage, and the association of unit owners may, as provided in Subsection (9)(g)(iii), recover any payments the association of unit owners makes to remediate that unit and appurtenant limited common areas and facilities; and |
| (iv) |
the association of unit owners need not tender the claim to the association's insurer. |
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| (k) |
| (i) |
An insurer under a property insurance policy issued to an association of unit owners shall adjust with the association of unit owners a loss covered under the association's policy. |
| (ii) |
Notwithstanding Subsection (9)(k)(i), the insurance proceeds for a loss under a property insurance policy of an association of unit owners:
| (A) |
are payable to an insurance trustee that the association of unit owners designates or, if no trustee is designated, to the association of unit owners; and |
| (B) |
may not be payable to a holder of a security interest. |
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| (iii) |
An insurance trustee or an association of unit owners shall hold any insurance proceeds in trust for the association of unit owners, unit owners, and lien holders. |
| (iv) |
| (A) |
If damaged property is to be repaired or restored, insurance proceeds shall be disbursed first for the repair or restoration of the damaged property. |
| (B) |
After the disbursements described in Subsection (9)(k)(iv)(A) are made and the damaged property has been completely repaired or restored or the project terminated, any surplus proceeds are payable to the association of unit owners, unit owners, and lien holders, as provided in the declaration. |
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| (l) |
An insurer that issues a property insurance policy under this section, or the insurer's authorized agent, shall issue a certificate or memorandum of insurance to:
| (i) |
the association of unit owners; |
| (ii) |
a unit owner, upon the unit owner's written request; and |
| (iii) |
a holder of a security interest, upon the holder's written request. |
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| (m) |
A cancellation or nonrenewal of a property insurance policy under this section is subject to the procedures stated in Section 31A-21-303. |
| (n) |
A management committee that acquires from an insurer the property insurance required in this section is not liable to unit owners if the insurance proceeds are not sufficient to cover 100% of the full replacement cost of the insured property at the time of the loss. |
| (o) |
| (i) |
Unless required in the declaration, property insurance coverage is not required for fixtures, improvements, or betterments in a commercial unit or limited common areas and facilities appurtenant to a commercial unit in a mixed-use condominium project. |
| (ii) |
Notwithstanding any other provision of this section, an association of unit owners may obtain property insurance for fixtures, improvements, or betterments in a commercial unit in a mixed-use condominium project if allowed or required in the declaration. |
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| (p) |
| (i) |
This Subsection (9) does not prevent a person suffering a loss as a result of damage to property from asserting a claim, either directly or through subrogation, for the loss against a person at fault for the loss. |
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