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| | 98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014 SB3014 Introduced 2/7/2014, by Sen. William R. Haine SYNOPSIS AS INTRODUCED: | | 765 ILCS 605/12 | from Ch. 30, par. 312 |
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Amends the Condominium Property Act. Makes a technical change in a Section concerning insurance.
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| | A BILL FOR |
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1 | | AN ACT concerning civil law.
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2 | | Be it enacted by the People of the State of Illinois, |
3 | | represented in the General Assembly:
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4 | | Section 5. The Condominium Property Act is amended by |
5 | | changing Section 12 as follows:
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6 | | (765 ILCS 605/12) (from Ch. 30, par. 312)
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7 | | Sec. 12. Insurance.
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8 | | (a) Required coverage. No policy of insurance insurance |
9 | | shall be issued or
delivered to a condominium association, and |
10 | | no policy of insurance issued to a
condominium association |
11 | | shall be renewed, unless the insurance coverage under
the |
12 | | policy includes the following:
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13 | | (1) Property insurance. Property insurance (i) on the |
14 | | common
elements and the units, including the limited common |
15 | | elements and
except as otherwise determined by the board of |
16 | | managers, the bare
walls, floors, and ceilings of the unit, |
17 | | (ii) providing coverage for
special form causes of loss, |
18 | | and (iii) in a total amount of not less
than the full |
19 | | insurable replacement cost of the insured property, less
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20 | | deductibles, but including coverage for
the increased |
21 | | costs of construction due to building code requirements, at
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22 | | the time the
insurance is purchased and at each
renewal |
23 | | date.
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1 | | (2) General liability insurance. Commercial general |
2 | | liability
insurance against claims and liabilities arising |
3 | | in connection with the
ownership, existence, use, or |
4 | | management of the property in a minimum
amount of |
5 | | $1,000,000, or a greater amount deemed sufficient in the
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6 | | judgment of the board, insuring the board, the association, |
7 | | the
management agent, and their respective employees and |
8 | | agents and all
persons acting as agents. The developer must |
9 | | be included as an
additional insured in its capacity as a |
10 | | unit owner, manager, board
member, or officer. The unit |
11 | | owners must be included as additional
insured parties but |
12 | | only for claims and liabilities arising in
connection with |
13 | | the ownership, existence, use, or management of the
common |
14 | | elements. The insurance must cover claims of one or more
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15 | | insured parties against other insured parties.
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16 | | (3) Fidelity bond; directors and officers coverage.
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17 | | (A) An association with 6 or more dwelling units |
18 | | must obtain and
maintain a fidelity bond covering |
19 | | persons, including the managing agent
and its |
20 | | employees who control or disburse funds of the |
21 | | association, for
the maximum amount of coverage |
22 | | available to protect funds in the
custody or control of |
23 | | the association, plus the association reserve
fund.
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24 | | (B) All management companies that are responsible |
25 | | for the funds
held or administered by the association |
26 | | must be covered by a fidelity
bond for the maximum |
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1 | | amount of coverage available to protect those
funds. |
2 | | The association has standing to make a loss claim |
3 | | against
the bond of the managing agent as a party |
4 | | covered under the bond.
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5 | | (C) For purposes of paragraphs (A) and (B), the |
6 | | fidelity bond
must be in the full amount of association |
7 | | funds and reserves in the
custody of the association or |
8 | | the management company.
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9 | | (D) The board of directors must obtain directors |
10 | | and officers
liability coverage at a level deemed |
11 | | reasonable by the board, if not
otherwise established |
12 | | by the declaration or bylaws. Directors and
officers |
13 | | liability coverage must extend to all contracts and |
14 | | other
actions taken by the board in their official |
15 | | capacity as directors and
officers, but this coverage |
16 | | shall exclude actions for
which the directors are not |
17 | | entitled to
indemnification under the General Not For |
18 | | Profit Corporation Act of
1986 or the declaration and |
19 | | bylaws of the association.
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20 | | (b) Contiguous units; improvements and betterments. The |
21 | | insurance
maintained under subdivision (a)(1) must include the |
22 | | units, the limited
common elements except as otherwise |
23 | | determined by the board of managers,
and the common elements. |
24 | | The insurance need not cover improvements and
betterments to |
25 | | the units installed by unit owners, but if improvements
and |
26 | | betterments are covered, any increased cost may be assessed by |
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1 | | the
association against the units affected.
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2 | | Common elements include fixtures located within the |
3 | | unfinished
interior surfaces of the perimeter walls, floors, |
4 | | and ceilings of the
individual units initially installed by the |
5 | | developer. Common elements
exclude floor, wall, and ceiling |
6 | | coverings. "Improvements and
betterments" means all |
7 | | decorating, fixtures, and furnishings installed
or added to and |
8 | | located within the boundaries of the unit, including
electrical |
9 | | fixtures, appliances, air conditioning and heating
equipment, |
10 | | water heaters, or built-in cabinets installed by unit owners.
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11 | | (c) Deductibles. The board of directors of the association |
12 | | may,
in the case of a claim for damage to a unit or the common |
13 | | elements, (i)
pay the deductible amount as a common expense, |
14 | | (ii) after notice and an
opportunity for a hearing, assess the |
15 | | deductible amount against the
owners who caused the damage or |
16 | | from whose units the damage or cause of
loss originated, or |
17 | | (iii) require the unit owners of the units affected
to pay the |
18 | | deductible amount.
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19 | | (d) Other coverages. The declaration may require the |
20 | | association
to carry any other insurance, including workers |
21 | | compensation,
employment practices, environmental hazards, and |
22 | | equipment breakdown,
the board of directors considers |
23 | | appropriate to protect the
association, the unit owners, or |
24 | | officers, directors, or agents of the
association.
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25 | | (e) Insured parties; waiver of subrogation. Insurance |
26 | | policies
carried pursuant to subsections (a) and (b) must |
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1 | | include each of the
following provisions:
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2 | | (1) Each unit owner and secured party is an insured |
3 | | person under
the policy with respect to liability arising |
4 | | out of the unit owner's
interest in the common elements or |
5 | | membership in the association.
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6 | | (2) The insurer waives its right to subrogation under |
7 | | the policy
against any unit owner of the condominium or |
8 | | members of the unit
owner's household and against the |
9 | | association and members of the board
of directors.
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10 | | (3) The unit owner waives his or her right to |
11 | | subrogation under
the association policy against the |
12 | | association and the board of
directors.
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13 | | (f) Primary insurance. If at the time of a loss under the |
14 | | policy
there is other insurance in the name of a unit owner |
15 | | covering the same
property covered by the policy, the |
16 | | association's policy is primary
insurance.
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17 | | (g) Adjustment of losses; distribution of proceeds. Any |
18 | | loss
covered by the property policy under subdivision (a)(1) |
19 | | must be
adjusted by and with the association. The insurance |
20 | | proceeds for that
loss must be payable to the association, or |
21 | | to an insurance trustee
designated by the association for that |
22 | | purpose. The insurance trustee
or the association must hold any |
23 | | insurance proceeds in trust for unit
owners and secured parties |
24 | | as their interests may appear. The proceeds
must be disbursed |
25 | | first for the repair or restoration of the damaged
common |
26 | | elements, the bare walls, ceilings, and floors of the units, |
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1 | | and
then to any improvements and betterments the association |
2 | | may insure.
Unit owners are not entitled to receive any portion |
3 | | of the proceeds
unless there is a surplus of proceeds after the |
4 | | common elements and
units have been completely repaired or |
5 | | restored or the association has
been terminated as trustee.
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6 | | (h) Mandatory unit owner coverage. The board of directors |
7 | | may,
under the declaration and bylaws or by rule, require |
8 | | condominium unit
owners to obtain insurance covering their |
9 | | personal liability and
compensatory (but not consequential) |
10 | | damages to another unit caused by
the negligence of the owner |
11 | | or his or her guests, residents, or invitees,
or regardless of |
12 | | any negligence originating from the unit. The personal
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13 | | liability of a unit owner or association member must include |
14 | | the
deductible of the owner whose unit was damaged, any damage |
15 | | not covered
by insurance required by this subsection, as well |
16 | | as the decorating,
painting, wall and floor coverings, trim, |
17 | | appliances, equipment, and
other furnishings.
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18 | | If the unit owner does not purchase or produce evidence of
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19 | | insurance requested by the board, the directors may purchase |
20 | | the
insurance coverage and charge the premium cost back to the |
21 | | unit owner.
In no event is the board liable to any person |
22 | | either with regard
to its decision not to purchase the |
23 | | insurance, or with regard to the timing of
its purchase of the |
24 | | insurance or the amounts or types of coverages
obtained.
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25 | | (i) Certificates of insurance. Contractors and vendors |
26 | | (except public
utilities) doing business
with a condominium |
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1 | | association under contracts exceeding $10,000 per
year must |
2 | | provide certificates of insurance naming the association, its
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3 | | board of directors, and its managing agent as additional |
4 | | insured parties.
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5 | | (j) Non-residential condominiums. The provisions of this |
6 | | Section
may be varied or waived in the case of a condominium |
7 | | community in which
all units are restricted to nonresidential |
8 | | use.
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9 | | (k) Settlement of claims. Any insurer defending a liability |
10 | | claim
against a condominium association must notify the |
11 | | association of the
terms of the settlement no less than 10 days |
12 | | before settling the claim.
The association may not veto the |
13 | | settlement unless otherwise provided
by contract or statute.
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14 | | (Source: P.A. 92-518, eff. 6-1-02.)
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