381.9187 Insurance.
848 words·~4 min read·
/ky/chapter-381/381-9187A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(1)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:
(a)Property insurance on the common elements insuring against fire and
extended coverage perils and such other risks as may be determined by the
association. The total amount of insurance after application of any deductibles
shall be not less than one hundred percent (100%) 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, and other items normally excluded from
property policies; and
(b)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.
(2)If the insurance described in subsection
(1)of this section is not reasonably
available, the association shall immediately 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 may
carry any other insurance it deems appropriate to protect the association or the unit
owners.
(3)Insurance policies carried pursuant to subsection
(1)of this section shall provide
that:
(a)Each unit owner is an insured person under the policy with respect to liability
arising out of his or her interest in the common elements or membership in the
association;
(b)The insurer waives its right to subrogation under the policy against any unit
owner or member of his or her household;
(c)No act or omission by any unit owner, unless acting within the scope of his or
her authority on behalf of the association, will void the policy or be a
condition to recovery under the policy; and
(d)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.
(4)Any loss covered by the property policy under subsection
(1)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 mortgagee. The insurance trustee or the association shall hold any
insurance proceeds in trust for unit owners and lienholders as their interests may
appear. Subject to subsection
(6)of this section, the proceeds shall be disbursed first
for the repair or restoration of the damaged property, and unit owners and
lienholders 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
restored, or the condominium is terminated.
(5)An insurance policy issued to the association shall not prevent a unit owner from
obtaining insurance for his or her own benefit.
(6)Disposition of insurance proceeds shall be made as follows:
(a)Any portion of the condominium for which insurance is required under this
section and which is 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 statute or local
health or safety ordinance; or
3. Eighty percent (80%) of the unit owners, including every owner of a unit
or assigned limited common element which will not be rebuilt, vote not
to rebuild.
The cost of repair or replacement in excess of insurance proceeds and reserves
shall be a common expense;
(b)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 allocated, or to lienholders, as their interests may appear;
and
3. The remainder of the proceeds shall be distributed to all the unit owners
or lienholders, as their interests may appear, in proportion to the
common element interests of all the units.
If the unit owners vote not to rebuild any unit, that unit's allocated interests are
automatically reallocated upon the vote as if the unit had been acquired by
eminent domain under KRS 381.9113, and the association shall promptly
prepare, execute, and record an amendment to the declaration reflecting the
reallocations; and
(c)Notwithstanding the provisions of this subsection, KRS 381.9157 governs the
distribution of insurance proceeds if the condominium is terminated.
(7)The provisions of this section may be varied or waived in the case of a
condominium all of whose units are restricted to nonresidential use.