This is a historical version of this section. See bottom of page for enacting and amending history.
Superseded.
57-8a-405. Property insurance.
(1) This section applies to property insurance required
under Subsection 57-8a-403(1)(a).
(2) The property covered by property insurance shall include
any property that, under the declaration, is required to become common areas.
(3) The total amount of coverage provided by blanket
property 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 items normally excluded from property insurance policies.
(4) Property insurance shall include coverage for any
fixture, improvement, or betterment installed by a lot owner to an attached
dwelling or to a limited common area appurtenant to a dwelling on a lot,
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 an attached dwelling or to a limited common
area.
(5) Notwithstanding anything in this part and unless
otherwise provided in the declaration, an association is not required to obtain
property insurance for a loss to a dwelling that is not physically attached to
another dwelling or to a common area structure.
(6) Each lot owner is an insured person under a property
insurance policy.
(7) If a loss occurs that is covered by a property insurance
policy in the name of an association and another property insurance policy in
the name of a lot owner:
(a) the association's policy provides primary
insurance coverage; and
(b) notwithstanding Subsection (7)(a) and subject to
Subsection (8):
(i) a lot
owner is responsible for the association's policy deductible; and
(ii) the
lot owner's policy applies to that portion of the loss attributable to the
association's policy deductible.
(8) (a) As used in this Subsection (8):
(i)
"Covered loss" means a loss, resulting from a single event or
occurrence, that is covered by an association's property insurance policy.
(ii)
"Lot damage" means damage to any combination of a lot, a dwelling on
a lot, or a limited common area appurtenant to a lot or appurtenant to a
dwelling on a lot.
(iii)
"Lot damage percentage" means the percentage of total damage
resulting in a covered loss that is attributable to lot damage.
(b) A lot owner who owns a lot that has suffered lot
damage as part of a covered loss is responsible for an amount calculated by
applying the lot damage percentage for that lot to the amount of the deductible
under the association's property insurance policy.
(c) If a lot owner does not pay the amount required
under Subsection (8)(b) within 30 days after substantial completion of the
repairs to, as applicable, the lot, a dwelling on the lot, or the limited
common area appurtenant to the lot, an association may levy an assessment
against a lot owner for that amount.
(9) An association shall set aside an amount equal to the
amount of the association's property insurance policy deductible or $10,000,
whichever is less.
(10) (a) An association shall provide notice in accordance
with Section 57-8a-214 to
each lot owner of the lot owner's obligation under Subsection (8) for the
association's policy deductible and of any change in the amount of the
deductible.
(b) An association that fails to provide notice as
provided in Subsection (10)(a) is responsible for the amount of the deductible
increase that the association could have assessed to
a lot owner under Subsection (8).
(c) An association's failure to provide notice as
provided in Subsection (10)(a) may not be construed to invalidate any other
provision of this part.
(11) If, in the exercise of the business judgment rule, the
board determines that a claim is likely not to exceed the association's
property insurance policy deductible:
(a) the lot owner's policy is considered the policy
for primary coverage to the amount of the association's policy deductible;
(b) a lot owner who does not have a policy to cover
the association's property insurance policy deductible is responsible for the
loss to the amount of the association's policy deductible, as provided in
Subsection (8); and
(c) the association need not tender the claim to the
association's insurer.
(12) (a) An insurer under a property insurance policy issued
to an association shall adjust with the association a loss covered under the
association's policy.
(b) Notwithstanding Subsection (12)(a), the insurance
proceeds for a loss under an association's property insurance policy:
(i) are
payable to an insurance trustee that the association designates or, if no
trustee is designated, to the association; and
(ii) may
not be payable to a holder of a security interest.
(c) An insurance trustee or an association shall hold
any insurance proceeds in trust for the association, lot owners, and lien
holders.
(d) (i) Insurance proceeds shall be disbursed first
for the repair or restoration of the damaged property.
(ii) After
the disbursements described in Subsection (12)(d)(i) are made and the damaged
property has been completely repaired or restored or the project terminated,
any surplus proceeds are payable to the association, lot owners, and lien
holders.
(13) An insurer that issues a property insurance policy
under this part, or the insurer's authorized agent, shall issue a certificate
or memorandum of insurance to:
(a) the association;
(b) a lot owner, upon the lot owner's written request;
and
(c) a holder of a security interest, upon the holder's
written request.
(14) A cancellation or nonrenewal of a property insurance
policy under this section is subject to the procedures stated in Section 31A-21-303.
(15) A board that acquires from an insurer the property
insurance required in this section is not liable to lot 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.
Amended by Chapter 369, 2012 General Session