5312 - Insurance.

     § 5312.  Insurance.        (a)  Insurance to be carried by association.--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, all of the following:            (1)  Property insurance on the common facilities and        controlled facilities to the extent the controlled facilities        can be insured separately from the unit and, if insurance for        the unit is not provided by the association under subsection        (b) or the declaration, insuring against all common risks of        direct physical loss. The total amount of insurance after        application of any deductibles shall be not less than 80% of        the actual cash value of the insured property, exclusive of        land, excavations, foundations and other items normally        excluded from property policies.            (2)  Comprehensive general liability insurance, including        medical payments insurance, in an amount determined by the        executive board 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.            (3)  Any property or comprehensive general liability        insurance carried by the association may contain a deductible        provision.        (b)  Units having horizontal boundaries.--In the case of a     building containing units having horizontal boundaries described     in the declaration, that insurance described in subsection     (a)(1), to the extent reasonably available, shall include the     units but need not include improvements and betterments     installed by unit owners.        (c)  Other insurance carried by association.--If the     insurance described in subsections (a) and (b) is not     maintained, 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. The association may carry any     other insurance in such reasonable amounts and with such     reasonable deductibles as the executive board may deem     appropriate to protect the association or the unit owners.        (d)  Policy terms.--Insurance policies carried under     subsections (a) and (b) shall provide all of the following:            (1)  Each unit owner is an insured person under the        policy with respect to liability arising out of his        membership in the association.            (2)  The insurer waives its right to subrogation under        the policy against any unit owner or member of the owner's        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        risk covered by the policy, the association's policy is        primary insurance not contributing with the other insurance.        (e)  Proceeds from property insurance.--Any loss covered by     the property policy under subsections (a)(1) and (b) shall be     adjusted with the association, but the insurance proceeds for     that loss shall be 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), the proceeds shall be disbursed first for the repair or     restoration of the damaged common elements and units, 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 common elements and units have been     completely repaired or restored or the planned community is     terminated.        (f)  Unit owner insurance.--A unit owner may insure his unit     for all losses to his unit, including losses not covered by the     insurance maintained by the association due to a deductible     provision or otherwise. A residential unit owner shall insure     the owner's unit except as insurance is provided by the     association in accordance with this section or the declaration.     An insurance policy issued to the association shall not prevent     a unit owner from obtaining insurance for the owner's own     benefit, including, but not limited to, insurance to cover any     deductibles or losses not covered by the association's property     or comprehensive general liability insurance.        (g)  Evidence and cancellation of insurance.--An insurer that     has issued an insurance policy under this section shall issue     certificates or memoranda of insurance to the association and,     upon request, to any unit owner, mortgagee or beneficiary under     a deed of trust. The insurance may not be canceled until 30 days     after notice of the proposed cancellation 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.        (h)  Disposition of insurance proceeds.--            (1)  Any portion of the planned community for which        insurance is required to be maintained by the association by        this section or the declaration and which is damaged or        destroyed shall be repaired or replaced promptly by the        association unless:                (i)  the planned community is terminated;                (ii)  repair or replacement would be illegal under            any State or local health or safety statute or ordinance;            or                (iii)  80% of the unit owners, including every owner            of a unit or assigned limited common element which will            not be rebuilt, vote not to rebuild.        Except for the costs of repair or replacement which are not        covered due to deductibles, the cost of repair or replacement        in excess of insurance proceeds and reserves, which have not        been identified by the executive board to fund costs of        capital expenditures budgeted for the current fiscal year of        the association, is a common expense.            (2)  Any portion of the planned community for which        insurance is required to be maintained by the unit owner by        this section or the declaration and which is damaged or        destroyed shall be repaired or replaced promptly by the unit        owner unless:                (i)  the planned community is terminated;                (ii)  repair or replacement would be illegal under            any State or local health or safety statute or ordinance;            or                (iii)  80% of the unit owners, including every owner            of a unit or assigned limited common element which will            not be rebuilt, vote to not rebuild.        The cost of repair or replacement of these portions in excess        of insurance proceeds is the unit owner's expense.            (3)  If the entire planned community is not repaired or        replaced, the following apply:                (i)  The insurance proceeds attributable to the            damaged common elements shall be used to restore the            damaged area to a condition compatible with the remainder            of the planned community.                (ii)  The insurance proceeds attributable to units            shall be paid to unit owners except those proceeds            attributable to controlled facilities for which insurance            is separately maintained by the association under this            section or the declaration shall be distributed to all            unit owners in proportion to their common expense            liability. Proceeds attributable to limited common            facilities which are not rebuilt shall be distributed            equally to owners of units to which those limited common            facilities were assigned.                (iii)  The remainder of the proceeds shall be            distributed to all the unit owners in proportion to their            common expense liability.            (4)  If the unit owners vote not to rebuild any unit,        that unit's votes in the association and common expense        liability are automatically reallocated upon the vote as if        the unit had been condemned under section 5107(a) (relating        to eminent domain), and the association promptly shall        prepare, execute and record an amendment to the declaration        reflecting the reallocations.            (5)  Notwithstanding the provisions of this subsection,        section 5220 (relating to termination of planned community)        governs the distribution of insurance proceeds if the planned        community is terminated.        (i)  Nonresidential planned communities.--The provisions of     this section may be varied or waived in the case of a planned     community all of whose units are restricted to nonresidential     use.        (j)  Recovery of deductibles.--If any insurance policy     maintained by the association contains a deductible, then that     portion of any loss or claim which is not covered by insurance     due to the application of a deductible, as well as any claim or     loss for which the association is self-insured, shall be levied     by the executive board in accordance with section 5314(c)     (relating to assessments for common expenses).     (Nov. 30, 2004, P.L.1486, No.189, eff. 60 days)        2004 Amendment.  Act 189 amended subsecs. (a), (c), (f) and     (h) and added subsec. (j).        Cross References.  Section 5312 is referred to in sections     5221, 5307, 5402 of this title.