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      RS 9:1123.112     


§1123.112. Insurance

            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:

            (1) Property insurance on the common elements and units, exclusive of improvements and betterments installed in units by unit owners, insuring against all risks of direct physical loss commonly insured against. The total amount of insurance after application of any deductibles shall be not less than eighty percent of the actual cash value of the insured property, exclusive of land, excavations, foundations, and other items normally excluded from property policies; and

            (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.

            B. If the insurance described in Subsection A of this Section 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, and the association in any event may carry any other insurance it deems appropriate to protect the association or the unit owners.

            C. Insurance policies carried pursuant to Subsection A of this Section must provide that:

            (1) Each unit owner is an insured person under the policy with respect to liability arising out of the unit owner's ownership of an individual interest in the common elements or membership in the association.

            (2) The association's insurer waives its right to subrogation under the policy against any unit owner of the condominium or members 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.

            (4)(a) A unit owner's property insurance policy covering betterments and improvements shall be primary for that unit owner's betterments and improvements to the extent of the value of the betterments and improvements. The association property insurance policy shall remain primary with respect to common elements, structural elements and components, and fixtures and improvements of the condominium units that are not classified as betterments and improvements to include damages caused by the event giving rise to an insurance claim.

            (b) For purposes of this Subsection, betterments and improvements include upgrades or improvements to a particular unit that are of a higher quality than those originally constructed within the units subject to the condominium regime. The replacement of worn or obsolete items shall not be considered betterments and improvements unless the items are upgrades or improvements that are of a higher quality than generally exist within units subject to the condominium regime. For insurance purposes, at the time of any loss, all unit improvements and betterments shall be considered the improvements and betterments of the current unit owner.

            (5) Nothing in this Section shall be construed to require the association to insure a unit owner's individual liability except as set forth in Paragraph (1) of this Subsection. Nothing in this Section shall be construed to prevent the association from pursuing any deductible or out-of-pocket expenses not covered by the association's insurance policies from the negligent unit owner.

            D. Any loss covered by the property policy under Paragraph (A)(1) of this Section 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. The insurance trustee or the association shall hold any insurance proceeds in trust for unit owners and lien holders as their interests may appear. Subject to the provisions of Subsection G of this Section, the proceeds shall be disbursed first for the repair or restoration of the damaged common elements and units, and 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 common elements and units have been completely repaired or restored, or the condominium is terminated.

            E. An insurance policy issued to the association does not prevent a unit owner from obtaining insurance for his own benefit.

            F. An insurer that has issued an insurance policy to the association under this Section shall issue certificates or memoranda of insurance, upon request, to any unit owner or mortgagee. The insurance may not be canceled until thirty days after notice of the proposed cancellation has been mailed to the association, each unit owner and each mortgagee to whom certificates of insurance have been issued.

            G. Any portion of the condominium damaged or destroyed shall be repaired or replaced promptly by the association unless (1) the condominium is terminated, (2) repair or replacement would be illegal under any state or local health or safety statute or ordinance, or (3) eighty percent, or such other percentage provided in the declaration, of the unit owners vote not to rebuild. The cost of repair or replacement in excess of insurance proceeds and reserves is a common expense. If the entire condominium is not repaired or replaced, (1) 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 condominium, (2) the insurance proceeds attributable to units and limited common elements which 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 assigned, and (3) the remainder of the proceeds shall be distributed to all the unit owners in proportion to their common element interest. If the unit owners vote not to rebuild any unit, that unit's entire common element interest, votes in the association, and common expense liability are automatically reallocated upon the vote as if the unit had been condemned under R.S. 9:1121.107, and the association promptly shall prepare, execute, and record an amendment to the declaration reflecting the reallocations. Notwithstanding the provisions of this Subsection, R.S. 9:1122.120 governs the distribution of insurance proceeds if the condominium is terminated.

            Acts 1979, No. 682, §1; Acts 2019, No. 228, §1.

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