Bill Text: IL HB2598 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the Condominium Property Act. Provides that if a property manager has an insurance policy in the name of the management company for a property managed, the property manager shall, before termination of coverage, provide a 90-day notice to the condominium owners. Provides that if the property manager fails to do so, the property manager is liable for all claims on the building and guilty of a Class B misdemeanor. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2019-03-29 - Rule 19(a) / Re-referred to Rules Committee [HB2598 Detail]

Download: Illinois-2019-HB2598-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB2598 Introduced , by Rep. Jim Durkin SYNOPSIS AS INTRODUCED:
765 ILCS 605/12 from Ch. 30, par. 312
Amends the Condominium Property Act. Provides that if a property manager has an insurance policy in the name of the management company for a property managed, the property manager shall, before termination of coverage, provide a 90-day notice to the condominium owners. Provides that if the property manager fails to do so, the property manager is liable for all claims on the building and guilty of a Class B misdemeanor. Effective immediately.
LRB101 10312 LNS 55418 b
CORRECTIONAL BUDGET AND IMPACT NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning civil law.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Condominium Property Act is amended by
changing Section 12 as follows:
(765 ILCS 605/12) (from Ch. 30, par. 312)
Sec. 12. Insurance.
(a) Required coverage. No policy of insurance shall be
issued or delivered to a condominium association, and no policy
of insurance issued to a condominium association shall be
renewed, unless the insurance coverage under the policy
includes the following:
(1) Property insurance. Property insurance (i) on the
common elements and the units, including the limited common
elements and except as otherwise determined by the board of
managers, the bare walls, floors, and ceilings of the unit,
(ii) providing coverage for special form causes of loss,
and (iii) providing coverage, at the time the insurance is
purchased and at each renewal date, in a total amount of
not less than the full insurable replacement cost of the
insured property, less deductibles, but including coverage
sufficient to rebuild the insured property in compliance
with building code requirements subsequent to an insured

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loss, including: Coverage B, demolition costs; and
Coverage C, increased cost of construction coverage. The
combined total of Coverage B and Coverage C shall be no
less than 10% of each insured building value, or $500,000,
whichever is less.
(2) General liability insurance. Commercial general
liability insurance against claims and liabilities arising
in connection with the ownership, existence, use, or
management of the property in a minimum amount of
$1,000,000, or a greater amount deemed sufficient in the
judgment of the board, insuring the board, the association,
the management agent, and their respective employees and
agents and all persons acting as agents. The developer must
be included as an additional insured in its capacity as a
unit owner, manager, board member, or officer. The unit
owners must be included as additional insured parties but
only for claims and liabilities arising in connection with
the ownership, existence, use, or management of the common
elements. The insurance must cover claims of one or more
insured parties against other insured parties.
(3) Fidelity bond; directors and officers coverage.
(A) An association with 6 or more dwelling units
must obtain and maintain a fidelity bond covering
persons, including the managing agent and its
employees who control or disburse funds of the
association, for the maximum amount of coverage

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available to protect funds in the custody or control of
the association, plus the association reserve fund.
(B) All management companies that are responsible
for the funds held or administered by the association
must be covered by a fidelity bond for the maximum
amount of coverage available to protect those funds.
The association has standing to make a loss claim
against the bond of the managing agent as a party
covered under the bond.
(C) For purposes of paragraphs (A) and (B), the
fidelity bond must be in the full amount of association
funds and reserves in the custody of the association or
the management company.
(D) The board of directors must obtain directors
and officers liability coverage at a level deemed
reasonable by the board, if not otherwise established
by the declaration or bylaws. Directors and officers
liability coverage must extend to all contracts and
other actions taken by the board in their official
capacity as directors and officers, but this coverage
shall exclude actions for which the directors are not
entitled to indemnification under the General Not For
Profit Corporation Act of 1986 or the declaration and
bylaws of the association. The coverage required by
this subparagraph (D) shall include, but not be limited
to, coverage of: defense of non-monetary actions;

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defense of breach of contract; and defense of decisions
related to the placement or adequacy of insurance. The
coverage required by this subparagraph (D) shall
include as an insured: past, present, and future board
members while acting in their capacity as members of
the board of directors; the managing agent; and
employees of the board of directors and the managing
agent.
(b) Contiguous units; improvements and betterments. The
insurance maintained under subdivision (a)(1) must include the
units, the limited common elements except as otherwise
determined by the board of managers, and the common elements.
The insurance need not cover improvements and betterments to
the units installed by unit owners, but if improvements and
betterments are covered, any increased cost may be assessed by
the association against the units affected.
Common elements include fixtures located within the
unfinished interior surfaces of the perimeter walls, floors,
and ceilings of the individual units initially installed by the
developer. Common elements exclude floor, wall, and ceiling
coverings. "Improvements and betterments" means all
decorating, fixtures, and furnishings installed or added to and
located within the boundaries of the unit, including electrical
fixtures, appliances, air conditioning and heating equipment,
water heaters, built-in cabinets installed by unit owners, or
any other additions, alterations, or upgrades installed or

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purchased by any unit owner.
(c) Deductibles. The board of directors of the association
may, in the case of a claim for damage to a unit or the common
elements, (i) pay the deductible amount as a common expense,
(ii) after notice and an opportunity for a hearing, assess the
deductible amount against the owners who caused the damage or
from whose units the damage or cause of loss originated, or
(iii) require the unit owners of the units affected to pay the
deductible amount.
(d) Other coverages. The declaration may require the
association to carry any other insurance, including workers
compensation, employment practices, environmental hazards, and
equipment breakdown, the board of directors considers
appropriate to protect the association, the unit owners, or
officers, directors, or agents of the association.
(e) Insured parties; waiver of subrogation. Insurance
policies carried pursuant to subsections (a) and (b) must
include each of the following provisions:
(1) Each unit owner and secured party is an insured
person under the policy with respect to liability arising
out of the unit owner's interest in the common elements or
membership in the association.
(2) The insurer waives its right to subrogation under
the policy against any unit owner of the condominium or
members of the unit owner's household and against the
association and members of the board of directors.

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(3) The unit owner waives his or her right to
subrogation under the association policy against the
association and the board of directors.
(f) Primary insurance. If at the time of a loss under the
policy there is other insurance in the name of a unit owner
covering the same property covered by the policy, the
association's policy is primary insurance.
(g) Adjustment of losses; distribution of proceeds. Any
loss covered by the property policy under subdivision (a)(1)
must be adjusted by and with the association. The insurance
proceeds for that loss must be payable to the association, or
to an insurance trustee designated by the association for that
purpose. The insurance trustee or the association must hold any
insurance proceeds in trust for unit owners and secured parties
as their interests may appear. The proceeds must be disbursed
first for the repair or restoration of the damaged common
elements, the bare walls, ceilings, and floors of the units,
and then to any improvements and betterments the association
may insure. Unit owners are not entitled to receive 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 association has been terminated as trustee.
(h) Mandatory unit owner coverage. The board of directors
may, under the declaration and bylaws or by rule, require
condominium unit owners to obtain insurance covering their
personal liability and compensatory (but not consequential)

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damages to another unit caused by the negligence of the owner
or his or her guests, residents, or invitees, or regardless of
any negligence originating from the unit. The personal
liability of a unit owner or association member must include
the deductible of the owner whose unit was damaged, any damage
not covered by insurance required by this subsection, as well
as the decorating, painting, wall and floor coverings, trim,
appliances, equipment, and other furnishings.
(i) Certificates of insurance. Contractors and vendors
(except public utilities) doing business with a condominium
association under contracts exceeding $10,000 per year must
provide certificates of insurance naming the association, its
board of directors, and its managing agent as additional
insured parties.
(j) Non-residential condominiums. The provisions of this
Section may be varied or waived in the case of a condominium
community in which all units are restricted to nonresidential
use.
(k) Settlement of claims. Any insurer defending a liability
claim against a condominium association must notify the
association of the terms of the settlement no less than 10 days
before settling the claim. The association may not veto the
settlement unless otherwise provided by contract or statute.
(l) The changes to this Section made by this amendatory Act
of the 98th General Assembly apply only to insurance policies
issued or renewed on or after June 1, 2015.

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(m) Property managers. If a property manager has an
insurance policy in the name of the management company for a
property managed, the property manager shall, before
termination of coverage, provide a 90-day notice to the
condominium owners. If the property manager fails to do so, the
property manager is liable for all claims on the building and
guilty of a Class B misdemeanor.
(Source: P.A. 98-762, eff. 6-1-15.)
Section 99. Effective date. This Act takes effect upon
becoming law.