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| Public Act 098-0762
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| SB3014 Enrolled | LRB098 19731 HEP 54944 b |
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AN ACT concerning civil law.
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Be it enacted by the People of the State of Illinois, |
represented in the General Assembly:
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Section 5. The Condominium Property Act is amended by |
changing Section 12 as follows:
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(765 ILCS 605/12) (from Ch. 30, par. 312)
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Sec. 12. Insurance.
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(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:
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(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 in a total amount of not less
than the |
full insurable replacement cost of the insured property, |
less
deductibles, but including coverage for
the increased |
costs of construction due to building code requirements, at
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the time the
insurance is purchased and at each
renewal |
date.
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(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
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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
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insured parties against other insured parties.
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(3) Fidelity bond; directors and officers coverage.
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(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 |
available to protect funds in the
custody or control of |
the association, plus the association reserve
fund.
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(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.
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(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.
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(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 |
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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; |
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.
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(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.
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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 |
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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, or built-in cabinets installed by unit owners, |
or any other additions, alterations, or upgrades installed or |
purchased by any unit owner.
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(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.
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(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.
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(e) Insured parties; waiver of subrogation. Insurance |
policies
carried pursuant to subsections (a) and (b) must |
include each of the
following provisions:
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(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 |
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membership in the association.
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(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.
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(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.
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(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 |
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restored or the association has
been terminated as trustee.
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(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) |
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
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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.
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If the unit owner does not purchase or produce evidence of
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insurance requested by the board, the directors may purchase |
the
insurance coverage and charge the premium cost back to the |
unit owner.
In no event is the board liable to any person |
either with regard
to its decision not to purchase the |
insurance, or with regard to the timing of
its purchase of the |
insurance or the amounts or types of coverages
obtained.
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(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
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board of directors, and its managing agent as additional |
insured parties.
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(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.
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(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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(Source: P.A. 92-518, eff. 6-1-02.)
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