General Assembly Raised Bill No. 6613
January Session, 2011 LCO No. 4716
*04716_______JUD*
Referred to Committee on Judiciary
Introduced by:
(JUD)
General Assembly
Raised Bill No. 6613
January Session, 2011
LCO No. 4716
*04716_______JUD*
Referred to Committee on Judiciary
Introduced by:
(JUD)
AN ACT CONCERNING INSURANCE REQUIREMENTS UNDER THE COMMON INTEREST OWNERSHIP ACT.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. Section 47-255 of the general statutes is repealed and the following is substituted in lieu there of (Effective October 1, 2011):
(a) 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 and subject to reasonable deductibles: (1) Property insurance on the common elements and, in a planned community, also on property that must become common elements, insuring against those risks of direct physical loss commonly insured against, which insurance, after application of any deductibles shall be not less than eighty per cent of the actual cash value of the insured property at the time the insurance is purchased and at each renewal date, exclusive of land, excavations, foundations and other items normally excluded from property insurance policies; (2) flood insurance in the event the condominium is located in a flood hazard area, as defined and determined by the National Flood Insurance Act, as amended, USC 42 Section 4101, P.L. 93-234, and the unit owners by vote direct; (3) commercial 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 bodily injury and property damage arising out of or in connection with the use, ownership or maintenance of the common elements and, in cooperatives, also of all units; and (4) fidelity insurance.
(b) In the case of a building that is part of a cooperative or that contains units [divided by] having horizontal boundaries described in the declaration, [or by vertical boundaries that comprise or are located within common walls between units,] the insurance maintained under subdivision (1) of subsection (a) of this section, to the extent reasonably available, shall include the units, [and all] but need not include improvements and betterments installed by unit owners. [, unless the declaration limits the association's authority to insure all improvements and betterments or the executive board decides, after giving notice and an opportunity for unit owners to comment, not to insure such improvements and betterments. In the case of common interest communities containing more than twelve units, unless the association insures all improvements and betterments, the association shall:
(1) Prepare and maintain a schedule of the standard fixtures, improvements and betterments in the units, including any standard wall, floor and ceiling coverings covered by the association's insurance policy;
(2) Provide such schedule at least annually to the unit owners in order to enable unit owners to coordinate their homeowners insurance coverage with the coverage afforded by the association's insurance policy; and
(3) Include such schedule in any resale certificate prepared pursuant to section 47-270.]
(c) If the insurance described in subsections (a) and (b) of this section is not reasonably available, the association promptly shall cause notice of that fact to be given to all unit owners pursuant to section 47-261c. The declaration may require the association to carry any other insurance, and the association may carry any other insurance it considers appropriate to protect the association or the unit owners.
(d) Insurance policies carried pursuant to subsections (a) and (b) of this section shall provide that: (1) Each unit owner is an insured person under the policy with respect to liability arising out of his 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 or member of his 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; and (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 provides primary insurance.
(e) Any loss covered by the property insurance policy under subdivision (1) of subsection (a) of this section and subsection (b) of this section shall be adjusted with the association, but the insurance proceeds for that loss are payable to any insurance trustee designated for that purpose, or otherwise to the association, and not to any holder of a security interest. The insurance trustee or the association shall hold any insurance proceeds in trust for the association, unit owners and lien holders as their interests may appear. Subject to the provisions of subsection (h) of this section, the proceeds shall be disbursed first for the repair or replacement of the damaged property, and the association, unit owners and lien holders are not entitled to receive payment of any portion of the proceeds unless there is a surplus of proceeds after the property has been completely repaired or replaced, or the common interest community is terminated.
(f) An insurance policy issued to the association does not prevent a unit owner from obtaining insurance for his own benefit.
(g) An insurer that has issued an insurance policy under this section shall issue certificates or memoranda of insurance to the association and, on request made in a record, to any unit owner or holder of a security interest. The insurer issuing the policy may not cancel or refuse to renew [it] the policy until sixty days after notice of the proposed cancellation or nonrenewal has been mailed to the association, each unit owner and each holder of a security interest to whom a certificate or memorandum of insurance has been issued at their respective last known addresses.
(h) (1) Any portion of the common interest community for which insurance is required under this section which is damaged or destroyed shall be repaired or replaced promptly by the association unless (A) the common interest community is terminated, in which case section 47-237 applies, (B) repair or replacement would be illegal under any state or local statute or ordinance governing health or safety, or (C) at least eighty per cent of the unit owners, including [every] each owner of a unit or assigned limited common element that will not be rebuilt, vote not to rebuild. The cost of repair or replacement in excess of insurance proceeds and reserves, regardless of whether such excess is the result of the application of a deductible under insurance coverage, is a common expense.
(2) If the entire common interest community is not repaired or replaced, (A) 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 common interest community, and (B) except to the extent that other persons will be distributees, (i) the insurance proceeds attributable to units and limited common elements that are not rebuilt shall be distributed to the owners of those units and the owners of the units to which those limited common elements were allocated, or to lien holders, as their interests may appear, and (ii) the remainder of the proceeds shall be distributed to all of the unit owners or lien holders, as their interests may appear, in proportion to the common expense liabilities of all of the units.
(3) If the unit owners vote not to rebuild any unit, that unit's allocated interests are automatically reallocated on the vote as if the unit had been acquired by eminent domain under subsection (a) of section 47-206, and the association promptly shall prepare, execute and record an amendment to the declaration reflecting the reallocations.
(i) The provisions of this section may be varied or waived in the case of a common interest community all of whose units are restricted to nonresidential use.
Sec. 2. Section 47-216 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2011):
(a) Except as provided in section 47-217, sections 47-202, 47-204, 47-205, 47-206, 47-218, 47-221, 47-222, 47-223, subsections (b), (d), (i) and (j) of section 47-236, sections 47-237, 47-240 and 47-244, subsection (f) of section 47-245, sections 47-250, 47-251, 47-252, 47-253, [47-255,] 47-257, 47-258, 47-260, 47-261b, 47-261c, 47-261d, 47-261e, 47-270 and 47-278, to the extent necessary in construing any of those sections, apply to all common interest communities created in this state before January 1, 1984; but those sections apply only with respect to events and circumstances occurring after January 1, 1984, and do not invalidate existing provisions of the declaration, bylaws or surveys or plans of those common interest communities.
(b) Section 47-210 and subsections (b) to (d), inclusive, of section 47-225, as amended by this act, apply to all common interest communities created in this state prior to January 1, 1984, but shall not invalidate existing provisions of the declarations, bylaws or surveys or plans of those common interest communities.
This act shall take effect as follows and shall amend the following sections:
Section 1 October 1, 2011 47-255
Sec. 2 October 1, 2011 47-216
This act shall take effect as follows and shall amend the following sections:
Section 1
October 1, 2011
47-255
Sec. 2
October 1, 2011
47-216
Statement of Purpose:
To eliminate certain insurance requirements under the Common Interest Ownership Act enacted in Public Act 09-225, including requirements with respect to buildings containing units divided by vertical boundaries and applicability of requirements to common interest communities created before January 1, 1984, and make technical changes.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]