§ 34-41-3.08 - Insurance.
SECTION 34-41-3.08
§ 34-41-3.08 Insurance. – (a) Commencing not later than the time a developer offers a time share for salein a time-share property in which the number of time shares is more than twelve(12), the managing entity shall maintain, to the extent reasonably availableand applicable and not otherwise unanimously agreed by the time-share owners orprovided by the developer or by a person managing a project of which thetime-share property is a part:
(1) Property insurance on the time-share property and anypersonal property available for use by time-share owners in conjunctiontherewith, other than personal property separately owned by a time-share owner,insuring against all risks of direct physical loss commonly insured against, ina total amount, after application of any deductibles, of not less than eightypercent (80%) of the actual cash value of the insured property, exclusive ofland excavations, foundations, and other items normally excluded from propertypolicies; and provided, however
(i) Prospective purchasers shall also be notified of theoption of purchasing insurance for the replacement value of the time shareproperty and its cost; and
(ii) Prospective purchasers shall also be notified of theoption of purchasing insurance for the loss of use of the time-share propertyand its cost; and
(2) Liability insurance, including medical paymentsinsurance, in an amount determined by the managing entity but not less than anyamount specified in the time-share instrument, covering all occurrencescommonly insured against for death, bodily injury, and property damage arisingout of or in connection with the use, ownership, or maintenance of thetime-share property and time-share units.
(b) If the insurance described in subdivisions (a)(1) and(a)(2) is not reasonably available, the managing entity promptly shall causenotice of that fact to be hand-delivered or sent prepaid by United States mailto all time-share owners. The managing entity shall make copies of allinsurance policies available for inspection by the time-share owners duringnormal business hours. The time-share instrument may require the managingentity to carry any other insurance, and the managing entity in any event maycarry any other insurance deemed appropriate.
(c) Each insurance policy carried pursuant to subsection (a)must provide that:
(1) Each time-share owner is an insured person under thepolicy whether designated as an insured by name individually or as part of anamed group or otherwise, as his or her interest may appear;
(2) The insurer waives its right to subrogation under thepolicy against any time-share owner or members of his or her household;
(3) No act or omission by any time-share owner, unless actingwithin the scope of his or her authority on behalf of an association, will voidthe policy or be a condition to recovery by any other person under the policy;and
(4) If, at the time of a loss under the policy, there isother insurance in the name of a time-share owner covering the same riskcovered by the policy, the policy maintained pursuant to subsection (a) isprimary insurance not contributing with the other insurance, and otherinsurance in the name of a time-share owner applies only to loss in excess ofthe primary coverage.
(d) Unless the insurance required by subdivision (a)(1) isprovided by a person managing a project of which the time-share property is apart, any loss covered by that insurance must be adjusted with, and theinsurance proceeds from that loss are payable to, the insurance trustee (whomay be a party in interest) designated in accordance with the time-shareinstrument. If none has been designated or if the designated trustee fails toserve, the managing entity is the insurance trustee. The insurance trusteeshall hold any insurance proceeds in trust for time-share owners and lienholders as their interests may appear and be determined in accordance with§ 34-41-2.05. Subject to the provisions of subsection (g), the proceedsmust be disbursed for the repair or restoration of the property, and time-shareowners and lien holders are not entitled to receive payment of any portion ofthe proceeds unless there is (1) a surplus of proceeds after the property hasbeen completely repaired or restored, or (2) a termination pursuant to §34-41-2.05.
(e) An insurance policy issued pursuant to subsection (a)does not prevent a time-share owner from obtaining insurance for his or her ownbenefit.
(f) An insurer that has issued an insurance policy under thissection shall issue certificates or memoranda of insurance to any associationand, upon written request, to any time-share owner, mortgagee, or beneficiaryunder a deed of trust. The insurance may not be cancelled until thirty (30)days after notice of the proposed cancellation has been mailed to any managingentity and each person to whom a certificate or memorandum of insurance hasbeen issued, at their respective last known addresses.
(g) Any portion of the time share property damaged ordestroyed must be repaired or replaced promptly by the managing entity unless(i) another person repairs or replaces it, (ii) there is a termination (§34-41-2.05), (iii) repair or replacement would be illegal under any state orlocal health or safety statute or ordinance, (iv) eighty percent (80%) of thetime-share owners, including every owner of a time share in a time-share unitthat will not be rebuilt, vote not to rebuild, or (v) a decision not to rebuildthe damaged property is made by another person empowered to make that decision.The cost of repair or replacement in excess of insurance proceeds and reservesis a time-share expense.
(2) If the entire property need not be repaired or replaced,unless the time-share instrument provides otherwise, (i) the insurance proceedsattributable to the damaged area must be used to restore the damaged area to acondition compatible with the remainder of the property, and (ii) the insuranceproceeds attributable to time-share units that are not rebuilt must bedistributed as if those units constituted a time-share property in which alltime shares had been terminated under § 34-41-2.05.
(h) The provisions of this section may be varied or waived inthe case of a time-share property in which none of the time-share units may beused as dwellings or for recreational purposes.