ARTICLE 8 - INSURANCE

8.1 - Types of Insurance Coverage.

The Association shall, at the discretion of the Board of Directors, purchase, obtain and maintain the following types of insurance, if and to the extent they are available at a reasonable premium cost: 

a. Property Insurance.

The Association shall obtain and maintain a master or blanket policy of property insurance, written on all risk, replacement cost basis, that satisfies all of the following conditions: 

Property Covered.

The policy shall cover the following real and personal property: Common Area.

All Common Area Improvements,

including the building and any additions or extensions thereto; all fixtures, machinery and equipment permanently affixed to the building and not located within a Unit; fences; monuments; lighting fixtures; exterior signs; and personal property owned or maintained by the Association; but excluding land; foundations; excavations; and other items typically excluded from property insurance coverage; and 

Units.

The standard fixtures and Improvements within individual Units as originally installed by Declarant and any equivalent replacements thereto, including, but not limited to, interior walls and doors; ceiling, floor and wall surface materials ( e.g., paint, wallpaper, mirrors, carpets, and hardwood floors); utility fixtures (including gas, electrical and plumbing); cabinets; built-in appliances; heating and air-conditioning systems; water heaters installed as a part of the original construction of the residence and any equivalent replacements thereto; but excluding any personal property located in the Unit; and excluding any Improvements or upgrades to any of the foregoing to the extent the replacement cost of any such Improvement or upgrade made after completion of the original construction of the Unit exceeds the replacement cost immediately before the installation of the Improvement or upgrade. 

Covered Cause of Loss.

The policy shall provide coverage against losses caused by fire and all other hazards normally covered by a "special form” policy or its equivalent. 

Dollar Limit.

The dollar limit of the policy shall not be less than the full replacement value of the covered property described in Section 8.1 (a) (i) above, provided that there may be lower dollar limits for specified items as is customarily provided in property insurance policies. 

Primary.

The policy shall be primary and non-contributing with any other insurance policy covering the same loss. 

Endorsements.

The policy shall contain the following endorsements or their equivalents: agreed amount, boiler and machinery (to the extent applicable), inflation guard, plate glass, ordinance or law, and replacement cost, and such other endorsements as the Board in its discretion shall elect. 

Waiver of Subrogation.

The policy shall waive all subrogation rights against any Owner or occupant and their family members and invitees. 

Deductible.

The amount of any deductible shall be paid by the Association and/or Owner pursuant to guidelines adopted by the Board. 

General Liability Insurance.

To the extent such insurance is reasonably obtainable, a policy of comprehensive general liability insurance naming as parties insured the Association, each member of the Association Board of Directors, any manager, the Owners and occupants of Units, Mortgagees and such other persons as the Board may determine. The policy will insure each named party against any liability incident to the ownership and use of the Common Area and including, if obtainable, a cross-liability or severability of interest endorsement insuring each insured against liability to each other insured. The limits of such insurance shall not be less than Two Million Dollars ($2,000,000.00) covering all claims for death, personal injury and property damage arising out of a single occurrence. Such insurance shall include coverage against water damage liability, liability for non-owned and hired automobiles, liability for property of others and any other liability or risk customarily covered with respect to common interest development projects similar in construction, location, facilities, and use.

Director's and Officer's Liability Insurance.

To the extent such insurance is reasonably obtainable the Association shall maintain individual liability insurance for its directors and officers providing coverage for negligent acts or omissions in their official capacities. The minimum coverage of such insurance shall be at least One Million Dollars ($1,000,000.00).

Additional Insurance and Bonds.

To the extent such insurance is reasonably obtainable, the Association may also purchase such additional insurance and bonds as it may, from time to time, determine to be necessary or desirable, including, without limiting the generality of this section, demolition insurance, flood insurance, earthquake insurance, and workers' compensation insurance. The Board shall also purchase and maintain fidelity bonds or insurance in an amount not less than one hundred percent (100%) of each year's estimated annual operating expenses and shall contain an endorsement of any person who may serve without compensation. The Board shall purchase and maintain such insurance on personal property owned by the Association and any other insurance, including directors and officers liability insurance, that it deems necessary or desirable.

8.2 - Board Authority to Alter Coverage.

Subject to the provisions of Section 8.7, the Board shall have the power and right to deviate from the insurance requirements contained in this article in any manner : that the Board, in its discretion, considers to be in the best interests of the Association. If the Board elects to materially reduce the coverage from the coverage required in this article, the Board shall make all reasonable efforts to notify the Members of the reduction in coverage and the reasons therefore at least 30 days prior to the effective date of the reduction. 

8.3 - Copies of Policies.

Copies of all insurance policies (or certificates thereof showing the premiums thereon have been paid) shall be retained by the Association and shall be available for inspection and copy by Owners and their Mortgagees at any reasonable time. 

8.4 - Individual Owner's Property Insurance.

Each Owner shall purchase and at all times maintain a policy of personal liability and property insurance insuring the Owner's Unit, any upgrades or additions to any fixtures or Improvements to the Owner's Unit, and personal property. The Association's insurance policies will not provide coverage against any of the foregoing. Any insurance maintained by an Owner must contain a waiver of subrogation rights by the insurer as to the other Owners, the Association, and any Mortgagee of the Owner's Unit. 

8.5 - Trustee.

All insurance proceeds payable under Section 8.1, above, may, at the discretion of the Board of Directors, be paid to a trustee to be held and expended for the benefit of the Owners, Mortgagees and others, as their respective interests shall appear. Said trustee shall be a commercial bank in the County that agrees in writing to accept such trust. 

8.6 - Adjustment of Losses.

Board is appointed attorney-in-fact by each Owner to negotiate and agree on the value and extent of any loss under any policy carried pursuant to Section 8.1, above. The Board is granted full right and authority to compromise and settle any claims or enforce any claim by legal action or otherwise and to execute releases in favor of any insured. 

8.7 - Governmental Lender Requirements.

Board Notwithstanding anything herein to the contrary, the Association shall maintain such policies, containing such terms, amount of coverage, endorsements, deductible amounts, named insureds, loss payees, standard mortgage clauses, notice of changes or cancellation, and an appropriate insurance company rating that shall satisfy the minimum requirements imposed by the FNMA, FHLMC, FHA, or VA or any successor thereto. If such requirements conflict, the more stringent requirements shall be met. In the event the Board is provided notice that any required insurance policy does not satisfy the minimum requirements imposed by FNMA, FHLMC, FHA, or VA or any successor thereto, the Board shall make all reasonable efforts to satisfy such minimum requirements within thirty (30) days of receiving such notice.