§1131.23. Insurance
A. Commencing not later than the time of the first conveyance of a
timeshare interest in timeshare property located in Louisiana to a person other
than a developer, the timeshare association shall maintain the following:
(1) Property insurance covering the timeshare property, 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 insurance policies; and
(2) Comprehensive general liability insurance, including medical
payments insurance, in an amount determined by the board of directors of the
timeshare association, 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 timeshare property.
B.(1) 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 owners.
(2) The declaration may require the timeshare association to carry any
other insurance, and the timeshare association in any event may carry any other
insurance it deems appropriate, to protect the association or the owners.
C. Insurance policies carried pursuant to Subsection A of this Section
must provide that:
(1) Each owner is an insured person under the policy with respect to
liability arising out of his ownership of a timeshare interest in the timeshare
property or his membership in the association.
(2) The insurer waives its right to subrogation under the policy against
any owner or members of his household.
(3) No act or omission by any 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 the owner covering the same property covered by the policy, the
policy is primary insurance not contributing with the other insurance.
D. Any loss covered by the property policy under Paragraph (A)(1) of
this Section shall be adjusted with the timeshare association, but the insurance
proceeds for that loss shall be payable to any insurance trustee designated for
that purpose, or otherwise to the timeshare association, and not to any
mortgagee. The insurance trustee or the timeshare association shall hold any
insurance proceeds in trust for owners and privilege holders as their interest
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
timeshare property, and owners and privilege holders are not entitled to receive
payment of any portion of the proceeds unless there is a surplus of proceeds
after the timeshare property has been completely repaired or restored, or the
timeshare plan is terminated.
E. An insurance policy issued to the timeshare association does not
prevent an owner from obtaining insurance for his own benefit.
F. An insurer that has issued an insurance policy to the timeshare
association under this Section shall issue certificates or memoranda of
insurance, upon request, to any owner or mortgagee. The insurance may not
be cancelled until thirty days after notice of the proposed cancellation has been
mailed to the timeshare association, each owner and each mortgagee to whom
certificates of insurance have been issued.
G.(1) Any portion of the timeshare property damaged or destroyed shall
be repaired or replaced promptly by the timeshare association unless any of the
following occur:
(a) The timeshare plan is terminated.
(b) Repair or replacement would be illegal under any state or local
health or safety statute or ordinance.
(c) Eighty percent, or such other percentage provided in the
declaration, of the owners vote not to rebuild.
(d) The cost of repair or replacement of timeshare property subject to
an ownership timeshare interest in excess of insurance proceeds and reserves
is a common expense.
(2) In the case of an ownership timeshare interest, if the entire
timeshare property is not repaired or replaced:
(a) The insurance proceeds attributable to the damaged timeshare
property shall be used to restore the damaged area to a condition compatible
with the remainder of the timeshare property.
(b) The insurance proceeds attributable to timeshare property which is
not rebuilt shall be distributed to the owners of those timeshare interests and
the owners of the timeshare interests to which unrepaired limited common
elements were assigned.
(c) The remainder of the insurance proceeds shall be distributed to all
the owners in proportion to their interest in the timeshare property.
(3) In the case of a lease timeshare interest, if the entire timeshare
property is not repaired or replaced:
(a) The insurance proceeds attributable to the damaged timeshare
property shall be used to restore the damaged area to a condition compatible
with the remainder of the timeshare property.
(b) The insurance proceeds attributable to the timeshare property which
is not rebuilt shall be distributed to the owners of those timeshare interests and
the owners of the timeshare interests to which those limited common elements
were assigned up to the amount of the owner's purchase price reduced by a
sum computed by multiplying the purchase price by a fraction, the numerator
of which is the number of years the owner has owned the lease timeshare
interest and the denominator of which is the original term of the lease
timeshare interests.
(c) The remainder of the proceeds shall be distributed to the developer.
(4) If the owners vote not to rebuild any unit, that unit's entire common
element interest, vote in the association, and common expense liability are
automatically reallocated upon the vote as if the unit had been condemned.
The association promptly shall prepare, execute, and record an amendment to
the declaration reflecting the reallocations.
H. The managing entity shall make available for reasonable inspection
by purchasers or their authorized agents a copy of each policy of insurance.
Added by Acts 1983, No. 552, §1; Acts 1984, No. 943, §1, eff. July 20,
1984; Acts 1985, No. 999, §3; Acts 2003, No. 978, §1.
NOTE: SEE ACTS 1985, NO. 999, §5.