Article 8 - Insurance
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8.1 Liability Insurance. The Association shall obtain and maintain a comprehensive public liability insurance policy insuring the Association, any manager, Declarant, the Association's directors and officers, and the Owners and occupants of the Residential Lots and their respective family members against any liability incident to: (i) the ownership or use of the Common Area or any other Association owned or maintained real or personal property, and (ii) the performance or nonperformance of any of the Association's duties under this Declaration. The policy shall include, if obtainable, a cross liability or severability of interest endorsement insuring each insured against the liability to each other. The limits of such insurance shall not be less than $1,000,000 covering all claims for death, personal injury and property damage arising out of a single occurrence. Such insurance shall include coverage against water damage liability, liability for non-owned and hired automobiles, liability for property of others, and other liability or risk customarily covered with respect to projects similar in construction, location and use and shall require at least ten days' written notice to the Association before the policy can be cancelled or substantially modified.
8.2 Association Property Insurance. The Association shall obtain and maintain a master property insurance policy on the Common Area improvements. The policy shall satisfy each of the following conditions subject to such revisions as the Board may authorize under Section 8.3:
(i) Property Covered: All Common Area Improvements, including recreational buildings and any additions or extensions thereto; all fixtures, machinery and equipment permanently affixed to the building; fences; monuments; lighting fixtures; exterior signs; and personal property owned or maintained by the Association; but excluding land; foundations; excavations; and other items typically excluded from property insurance coverage.
(ii) Covered Cause of Loss: The policy shall provide coverage against losses caused by fire and all other hazards normally covered by a "special form" policy or its equivalent.
(iii) Dollar Limit: The dollar limit of the policy shall not be less than the full replacement value of the covered property described in Section 8.2(i) above, provided that there may be lower dollar limits for specified items as is customarily provided in property insurance policies.
(iv) Primary: The policy shall be primary and noncontributing with any other insurance policy covering the same loss.
(v) Endorsements: The policy shall contain the following endorsements or their equivalents; agreed amount, inflation guard, ordinance or law, and replacement cost, and such other endorsements as the Board in its discretion shall elect.
(vi) Waiver of Subrogation: The policy shall waive all subrogation rights against any Owner or occupant and their family members and invitees.
(vii) Cancellation: The policy shall provide 30 days' prior notice of cancellation.
8.3 Board's Authority to Revise Insurance Coverage. The Board shall have the power and right to deviate from the insurance requirements contained in this Article 8 in any manner that the Board, in its discretion, considers to be in the best interests of the Association. If the Board elects to materially reduce the coverage from the coverage required in this Article 8, the Board shall make all reasonable efforts to notify the Members of the reduction in coverage and the reasons therefor at least 30 days prior to the effective date of the reduction.
The Board is authorized to negotiate and agree on the value and extent of any loss under any policy carried by the Association, including, but not limited to, the right and authority to compromise and settle any claim or enforce any claim by legal action or otherwise and to execute releases in favor of any insurer.
Each Owner, by acceptance of a deed to a Lot, irrevocably appoints the Association or the Insurance Trustee, described in Section 8.5, as the Owner's attorney-in-fact for purposes of procuring, negotiating, accepting, compromising, releasing, settling, distributing and taking other related actions in connection with any insurance policy maintained by the Association and any losses or claims related thereto and agrees to be bound by the actions so taken as if the Owner had personally taken the action.
8.4 Periodic Insurance Review. The Board periodically (and not less than once every three years) shall review the Association's insurance policies and make such adjustments to the policies' terms and conditions as the Board considers to be in the best interests of the Association. The review shall include an appraisal by a qualified appraiser of the current replacement costs of all covered property under the Association's policy unless the Board is satisfied that the current dollar limit of the property policy, coupled with the amount of actual reserves on hand, is equal to or greater than the current replacement costs.
8.5 Insurance Trustee. All property insurance proceeds payable to the Association under the policy described in Section 8.2, subject to the rights of Mortgagees under Article 10, may be paid to a trustee as designated by the Board to be held and expended for the benefit of the Owners and Mortgagees as their respective interests shall appear. The trustee shall be a commercial bank or other financial institution with trust powers in the county in which the Development is located that agrees in writing to accept such trust. If repair or reconstruction is authorized, the Association will have the duty to contract for such work as provided for in this Declaration.
8.6 Other Insurance. In addition to the policies described in Section 8.1 and 8.2, the Association shall obtain and maintain the following insurance:
(i) Workers Compensation insurance to the extent required by law;
(ii) fidelity bonds or insurance covering officers, directors and employees who have access to any Association funds;
(iii) flood insurance on Common Area improvements if the Development is located in an area designated by an appropriate governmental agency as a special flood hazard area and the improvements are of the nature on which property insurance is normally maintained;
(iv) officers and directors liability insurance; and
(v) such other insurance as the Board in its discretion considers necessary or advisable.
