Full Text of SB3014 98th General Assembly
SB3014enr 98TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning civil law.
| 2 | | Be it enacted by the People of the State of Illinois, | 3 | | represented in the General Assembly:
| 4 | | Section 5. The Condominium Property Act is amended by | 5 | | changing Section 12 as follows:
| 6 | | (765 ILCS 605/12) (from Ch. 30, par. 312)
| 7 | | Sec. 12. Insurance.
| 8 | | (a) Required coverage. No policy of insurance shall be | 9 | | issued or
delivered to a condominium association, and no policy | 10 | | of insurance issued to a
condominium association shall be | 11 | | renewed, unless the insurance coverage under
the policy | 12 | | includes the following:
| 13 | | (1) Property insurance. Property insurance (i) on the | 14 | | common
elements and the units, including the limited common | 15 | | elements and
except as otherwise determined by the board of | 16 | | managers, the bare
walls, floors, and ceilings of the unit, | 17 | | (ii) providing coverage for
special form causes of loss, | 18 | | and (iii) providing coverage, at
the time the
insurance is | 19 | | purchased and at each
renewal date, in a total amount of | 20 | | not less
than the full insurable replacement cost of the | 21 | | insured property, less
deductibles, but including coverage | 22 | | sufficient to rebuild the insured property in compliance | 23 | | with building code requirements subsequent to an insured |
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| 1 | | loss, including: Coverage B, demolition costs; and | 2 | | Coverage C, increased cost of construction coverage. The | 3 | | combined total of Coverage B and Coverage C shall be no | 4 | | less than 10% of each insured building value, or $500,000, | 5 | | whichever is less in a total amount of not less
than the | 6 | | full insurable replacement cost of the insured property, | 7 | | less
deductibles, but including coverage for
the increased | 8 | | costs of construction due to building code requirements, at
| 9 | | the time the
insurance is purchased and at each
renewal | 10 | | date .
| 11 | | (2) General liability insurance. Commercial general | 12 | | liability
insurance against claims and liabilities arising | 13 | | in connection with the
ownership, existence, use, or | 14 | | management of the property in a minimum
amount of | 15 | | $1,000,000, or a greater amount deemed sufficient in the
| 16 | | judgment of the board, insuring the board, the association, | 17 | | the
management agent, and their respective employees and | 18 | | agents and all
persons acting as agents. The developer must | 19 | | be included as an
additional insured in its capacity as a | 20 | | unit owner, manager, board
member, or officer. The unit | 21 | | owners must be included as additional
insured parties but | 22 | | only for claims and liabilities arising in
connection with | 23 | | the ownership, existence, use, or management of the
common | 24 | | elements. The insurance must cover claims of one or more
| 25 | | insured parties against other insured parties.
| 26 | | (3) Fidelity bond; directors and officers coverage.
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| 1 | | (A) An association with 6 or more dwelling units | 2 | | must obtain and
maintain a fidelity bond covering | 3 | | persons, including the managing agent
and its | 4 | | employees who control or disburse funds of the | 5 | | association, for
the maximum amount of coverage | 6 | | available to protect funds in the
custody or control of | 7 | | the association, plus the association reserve
fund.
| 8 | | (B) All management companies that are responsible | 9 | | for the funds
held or administered by the association | 10 | | must be covered by a fidelity
bond for the maximum | 11 | | amount of coverage available to protect those
funds. | 12 | | The association has standing to make a loss claim | 13 | | against
the bond of the managing agent as a party | 14 | | covered under the bond.
| 15 | | (C) For purposes of paragraphs (A) and (B), the | 16 | | fidelity bond
must be in the full amount of association | 17 | | funds and reserves in the
custody of the association or | 18 | | the management company.
| 19 | | (D) The board of directors must obtain directors | 20 | | and officers
liability coverage at a level deemed | 21 | | reasonable by the board, if not
otherwise established | 22 | | by the declaration or bylaws. Directors and
officers | 23 | | liability coverage must extend to all contracts and | 24 | | other
actions taken by the board in their official | 25 | | capacity as directors and
officers, but this coverage | 26 | | shall exclude actions for
which the directors are not |
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| 1 | | entitled to
indemnification under the General Not For | 2 | | Profit Corporation Act of
1986 or the declaration and | 3 | | bylaws of the association. The coverage required by | 4 | | this subparagraph (D) shall include, but not be limited | 5 | | to, coverage of: defense of non-monetary actions; | 6 | | defense of breach of contract; and defense of decisions | 7 | | related to the placement or adequacy of insurance. The | 8 | | coverage required by this subparagraph (D) shall | 9 | | include as an insured: past, present, and future board | 10 | | members while acting in their capacity as members of | 11 | | the board of directors; the managing agent; and | 12 | | employees of the board of directors and the managing | 13 | | agent.
| 14 | | (b) Contiguous units; improvements and betterments. The | 15 | | insurance
maintained under subdivision (a)(1) must include the | 16 | | units, the limited
common elements except as otherwise | 17 | | determined by the board of managers,
and the common elements. | 18 | | The insurance need not cover improvements and
betterments to | 19 | | the units installed by unit owners, but if improvements
and | 20 | | betterments are covered, any increased cost may be assessed by | 21 | | the
association against the units affected.
| 22 | | Common elements include fixtures located within the | 23 | | unfinished
interior surfaces of the perimeter walls, floors, | 24 | | and ceilings of the
individual units initially installed by the | 25 | | developer. Common elements
exclude floor, wall, and ceiling | 26 | | coverings. "Improvements and
betterments" means all |
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| 1 | | decorating, fixtures, and furnishings installed
or added to and | 2 | | located within the boundaries of the unit, including
electrical | 3 | | fixtures, appliances, air conditioning and heating
equipment, | 4 | | water heaters, or built-in cabinets installed by unit owners , | 5 | | or any other additions, alterations, or upgrades installed or | 6 | | purchased by any unit owner .
| 7 | | (c) Deductibles. The board of directors of the association | 8 | | may,
in the case of a claim for damage to a unit or the common | 9 | | elements, (i)
pay the deductible amount as a common expense, | 10 | | (ii) after notice and an
opportunity for a hearing, assess the | 11 | | deductible amount against the
owners who caused the damage or | 12 | | from whose units the damage or cause of
loss originated, or | 13 | | (iii) require the unit owners of the units affected
to pay the | 14 | | deductible amount.
| 15 | | (d) Other coverages. The declaration may require the | 16 | | association
to carry any other insurance, including workers | 17 | | compensation,
employment practices, environmental hazards, and | 18 | | equipment breakdown,
the board of directors considers | 19 | | appropriate to protect the
association, the unit owners, or | 20 | | officers, directors, or agents of the
association.
| 21 | | (e) Insured parties; waiver of subrogation. Insurance | 22 | | policies
carried pursuant to subsections (a) and (b) must | 23 | | include each of the
following provisions:
| 24 | | (1) Each unit owner and secured party is an insured | 25 | | person under
the policy with respect to liability arising | 26 | | out of the unit owner's
interest in the common elements or |
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| 1 | | membership in the association.
| 2 | | (2) The insurer waives its right to subrogation under | 3 | | the policy
against any unit owner of the condominium or | 4 | | members of the unit
owner's household and against the | 5 | | association and members of the board
of directors.
| 6 | | (3) The unit owner waives his or her right to | 7 | | subrogation under
the association policy against the | 8 | | association and the board of
directors.
| 9 | | (f) Primary insurance. If at the time of a loss under the | 10 | | policy
there is other insurance in the name of a unit owner | 11 | | covering the same
property covered by the policy, the | 12 | | association's policy is primary
insurance.
| 13 | | (g) Adjustment of losses; distribution of proceeds. Any | 14 | | loss
covered by the property policy under subdivision (a)(1) | 15 | | must be
adjusted by and with the association. The insurance | 16 | | proceeds for that
loss must be payable to the association, or | 17 | | to an insurance trustee
designated by the association for that | 18 | | purpose. The insurance trustee
or the association must hold any | 19 | | insurance proceeds in trust for unit
owners and secured parties | 20 | | as their interests may appear. The proceeds
must be disbursed | 21 | | first for the repair or restoration of the damaged
common | 22 | | elements, the bare walls, ceilings, and floors of the units, | 23 | | and
then to any improvements and betterments the association | 24 | | may insure.
Unit owners are not entitled to receive any portion | 25 | | of the proceeds
unless there is a surplus of proceeds after the | 26 | | common elements and
units have been completely repaired or |
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| 1 | | restored or the association has
been terminated as trustee.
| 2 | | (h) Mandatory unit owner coverage. The board of directors | 3 | | may,
under the declaration and bylaws or by rule, require | 4 | | condominium unit
owners to obtain insurance covering their | 5 | | personal liability and
compensatory (but not consequential) | 6 | | damages to another unit caused by
the negligence of the owner | 7 | | or his or her guests, residents, or invitees,
or regardless of | 8 | | any negligence originating from the unit. The personal
| 9 | | liability of a unit owner or association member must include | 10 | | the
deductible of the owner whose unit was damaged, any damage | 11 | | not covered
by insurance required by this subsection, as well | 12 | | as the decorating,
painting, wall and floor coverings, trim, | 13 | | appliances, equipment, and
other furnishings.
| 14 | | If the unit owner does not purchase or produce evidence of
| 15 | | insurance requested by the board, the directors may purchase | 16 | | the
insurance coverage and charge the premium cost back to the | 17 | | unit owner.
In no event is the board liable to any person | 18 | | either with regard
to its decision not to purchase the | 19 | | insurance, or with regard to the timing of
its purchase of the | 20 | | insurance or the amounts or types of coverages
obtained.
| 21 | | (i) Certificates of insurance. Contractors and vendors | 22 | | (except public
utilities) doing business
with a condominium | 23 | | association under contracts exceeding $10,000 per
year must | 24 | | provide certificates of insurance naming the association, its
| 25 | | board of directors, and its managing agent as additional | 26 | | insured parties.
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| 1 | | (j) Non-residential condominiums. The provisions of this | 2 | | Section
may be varied or waived in the case of a condominium | 3 | | community in which
all units are restricted to nonresidential | 4 | | use.
| 5 | | (k) Settlement of claims. Any insurer defending a liability | 6 | | claim
against a condominium association must notify the | 7 | | association of the
terms of the settlement no less than 10 days | 8 | | before settling the claim.
The association may not veto the | 9 | | settlement unless otherwise provided
by contract or statute. | 10 | | (l) The changes to this Section made by this amendatory Act | 11 | | of the 98th General Assembly apply only to insurance policies | 12 | | issued or renewed on or after June 1, 2015.
| 13 | | (Source: P.A. 92-518, eff. 6-1-02.)
| 14 | | Section 99. Effective date. This Act takes effect June 1, | 15 | | 2015. |
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