| ||||
Public Act 098-0762 | ||||
| ||||
| ||||
AN ACT concerning civil law.
| ||||
Be it enacted by the People of the State of Illinois, | ||||
represented in the General Assembly:
| ||||
Section 5. The Condominium Property Act is amended by | ||||
changing Section 12 as follows:
| ||||
(765 ILCS 605/12) (from Ch. 30, par. 312)
| ||||
Sec. 12. Insurance.
| ||||
(a) Required coverage. No policy of insurance shall be | ||||
issued or
delivered to a condominium association, and no policy | ||||
of insurance issued to a
condominium association shall be | ||||
renewed, unless the insurance coverage under
the policy | ||||
includes the following:
| ||||
(1) Property insurance. Property insurance (i) on the | ||||
common
elements and the units, including the limited common | ||||
elements and
except as otherwise determined by the board of | ||||
managers, the bare
walls, floors, and ceilings of the unit, | ||||
(ii) providing coverage for
special form causes of loss, | ||||
and (iii) providing coverage, at
the time the
insurance is | ||||
purchased and at each
renewal date, in a total amount of | ||||
not less
than the full insurable replacement cost of the | ||||
insured property, less
deductibles, but including coverage | ||||
sufficient to rebuild the insured property in compliance | ||||
with building code requirements subsequent to an insured |
loss, including: Coverage B, demolition costs; and | ||
Coverage C, increased cost of construction coverage. The | ||
combined total of Coverage B and Coverage C shall be no | ||
less than 10% of each insured building value, or $500,000, | ||
whichever is less in a total amount of not less
than the | ||
full insurable replacement cost of the insured property, | ||
less
deductibles, but including coverage for
the increased | ||
costs of construction due to building code requirements, at
| ||
the time the
insurance is purchased and at each
renewal | ||
date .
| ||
(2) General liability insurance. Commercial general | ||
liability
insurance against claims and liabilities arising | ||
in connection with the
ownership, existence, use, or | ||
management of the property in a minimum
amount of | ||
$1,000,000, or a greater amount deemed sufficient in the
| ||
judgment of the board, insuring the board, the association, | ||
the
management agent, and their respective employees and | ||
agents and all
persons acting as agents. The developer must | ||
be included as an
additional insured in its capacity as a | ||
unit owner, manager, board
member, or officer. The unit | ||
owners must be included as additional
insured parties but | ||
only for claims and liabilities arising in
connection with | ||
the ownership, existence, use, or management of the
common | ||
elements. The insurance must cover claims of one or more
| ||
insured parties against other insured parties.
| ||
(3) Fidelity bond; directors and officers coverage.
|
(A) An association with 6 or more dwelling units | ||
must obtain and
maintain a fidelity bond covering | ||
persons, including the managing agent
and its | ||
employees who control or disburse funds of the | ||
association, for
the maximum amount of coverage | ||
available to protect funds in the
custody or control of | ||
the association, plus the association reserve
fund.
| ||
(B) All management companies that are responsible | ||
for the funds
held or administered by the association | ||
must be covered by a fidelity
bond for the maximum | ||
amount of coverage available to protect those
funds. | ||
The association has standing to make a loss claim | ||
against
the bond of the managing agent as a party | ||
covered under the bond.
| ||
(C) For purposes of paragraphs (A) and (B), the | ||
fidelity bond
must be in the full amount of association | ||
funds and reserves in the
custody of the association or | ||
the management company.
| ||
(D) The board of directors must obtain directors | ||
and officers
liability coverage at a level deemed | ||
reasonable by the board, if not
otherwise established | ||
by the declaration or bylaws. Directors and
officers | ||
liability coverage must extend to all contracts and | ||
other
actions taken by the board in their official | ||
capacity as directors and
officers, but this coverage | ||
shall exclude actions for
which the directors are not |
entitled to
indemnification under the General Not For | ||
Profit Corporation Act of
1986 or the declaration and | ||
bylaws of the association. The coverage required by | ||
this subparagraph (D) shall include, but not be limited | ||
to, coverage of: defense of non-monetary actions; | ||
defense of breach of contract; and defense of decisions | ||
related to the placement or adequacy of insurance. The | ||
coverage required by this subparagraph (D) shall | ||
include as an insured: past, present, and future board | ||
members while acting in their capacity as members of | ||
the board of directors; the managing agent; and | ||
employees of the board of directors and the managing | ||
agent.
| ||
(b) Contiguous units; improvements and betterments. The | ||
insurance
maintained under subdivision (a)(1) must include the | ||
units, the limited
common elements except as otherwise | ||
determined by the board of managers,
and the common elements. | ||
The insurance need not cover improvements and
betterments to | ||
the units installed by unit owners, but if improvements
and | ||
betterments are covered, any increased cost may be assessed by | ||
the
association against the units affected.
| ||
Common elements include fixtures located within the | ||
unfinished
interior surfaces of the perimeter walls, floors, | ||
and ceilings of the
individual units initially installed by the | ||
developer. Common elements
exclude floor, wall, and ceiling | ||
coverings. "Improvements and
betterments" means all |
decorating, fixtures, and furnishings installed
or added to and | ||
located within the boundaries of the unit, including
electrical | ||
fixtures, appliances, air conditioning and heating
equipment, | ||
water heaters, or built-in cabinets installed by unit owners , | ||
or any other additions, alterations, or upgrades installed or | ||
purchased by any unit owner .
| ||
(c) Deductibles. The board of directors of the association | ||
may,
in the case of a claim for damage to a unit or the common | ||
elements, (i)
pay the deductible amount as a common expense, | ||
(ii) after notice and an
opportunity for a hearing, assess the | ||
deductible amount against the
owners who caused the damage or | ||
from whose units the damage or cause of
loss originated, or | ||
(iii) require the unit owners of the units affected
to pay the | ||
deductible amount.
| ||
(d) Other coverages. The declaration may require the | ||
association
to carry any other insurance, including workers | ||
compensation,
employment practices, environmental hazards, and | ||
equipment breakdown,
the board of directors considers | ||
appropriate to protect the
association, the unit owners, or | ||
officers, directors, or agents of the
association.
| ||
(e) Insured parties; waiver of subrogation. Insurance | ||
policies
carried pursuant to subsections (a) and (b) must | ||
include each of the
following provisions:
| ||
(1) Each unit owner and secured party is an insured | ||
person under
the policy with respect to liability arising | ||
out of the unit owner's
interest in the common elements or |
membership in the association.
| ||
(2) The insurer waives its right to subrogation under | ||
the policy
against any unit owner of the condominium or | ||
members of the unit
owner's household and against the | ||
association and members of the board
of directors.
| ||
(3) The unit owner waives his or her right to | ||
subrogation under
the association policy against the | ||
association and the board of
directors.
| ||
(f) Primary insurance. If at the time of a loss under the | ||
policy
there is other insurance in the name of a unit owner | ||
covering the same
property covered by the policy, the | ||
association's policy is primary
insurance.
| ||
(g) Adjustment of losses; distribution of proceeds. Any | ||
loss
covered by the property policy under subdivision (a)(1) | ||
must be
adjusted by and with the association. The insurance | ||
proceeds for that
loss must be payable to the association, or | ||
to an insurance trustee
designated by the association for that | ||
purpose. The insurance trustee
or the association must hold any | ||
insurance proceeds in trust for unit
owners and secured parties | ||
as their interests may appear. The proceeds
must be disbursed | ||
first for the repair or restoration of the damaged
common | ||
elements, the bare walls, ceilings, and floors of the units, | ||
and
then to any improvements and betterments the association | ||
may insure.
Unit owners are not entitled to receive 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 association has
been terminated as trustee.
| ||
(h) Mandatory unit owner coverage. The board of directors | ||
may,
under the declaration and bylaws or by rule, require | ||
condominium unit
owners to obtain insurance covering their | ||
personal liability and
compensatory (but not consequential) | ||
damages to another unit caused by
the negligence of the owner | ||
or his or her guests, residents, or invitees,
or regardless of | ||
any negligence originating from the unit. The personal
| ||
liability of a unit owner or association member must include | ||
the
deductible of the owner whose unit was damaged, any damage | ||
not covered
by insurance required by this subsection, as well | ||
as the decorating,
painting, wall and floor coverings, trim, | ||
appliances, equipment, and
other furnishings.
| ||
If the unit owner does not purchase or produce evidence of
| ||
insurance requested by the board, the directors may purchase | ||
the
insurance coverage and charge the premium cost back to the | ||
unit owner.
In no event is the board liable to any person | ||
either with regard
to its decision not to purchase the | ||
insurance, or with regard to the timing of
its purchase of the | ||
insurance or the amounts or types of coverages
obtained.
| ||
(i) Certificates of insurance. Contractors and vendors | ||
(except public
utilities) doing business
with a condominium | ||
association under contracts exceeding $10,000 per
year must | ||
provide certificates of insurance naming the association, its
| ||
board of directors, and its managing agent as additional | ||
insured parties.
|
(j) Non-residential condominiums. The provisions of this | ||
Section
may be varied or waived in the case of a condominium | ||
community in which
all units are restricted to nonresidential | ||
use.
| ||
(k) Settlement of claims. Any insurer defending a liability | ||
claim
against a condominium association must notify the | ||
association of the
terms of the settlement no less than 10 days | ||
before settling the claim.
The association may not veto the | ||
settlement unless otherwise provided
by contract or statute. | ||
(l) The changes to this Section made by this amendatory Act | ||
of the 98th General Assembly apply only to insurance policies | ||
issued or renewed on or after June 1, 2015.
| ||
(Source: P.A. 92-518, eff. 6-1-02.)
| ||
Section 99. Effective date. This Act takes effect June 1, | ||
2015. |