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Insurance - 68 Pa. Cons. Stat. § 5312Legal Research Home > Pennsylvania Statutes
§ 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.
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Last modified: November 27, 2007 |
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