Chapter 305
2022 -- S 2786
Enacted 06/28/2022

A N   A C T
RELATING TO PROPERTY -- CONDOMINIUM LAW

Introduced By: Senators F Lombardi, Lombardo, McCaffrey, DiMario, and Lawson

Date Introduced: March 24, 2022

It is enacted by the General Assembly as follows:
     SECTION 1. Section 34-36.1-3.13 of the General Laws in Chapter 34-36.1 entitled
"Condominium Law" is hereby amended to read as follows:
     34-36.1-3.13. Insurance.
     (a) 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:
     (1) Property insurance on the common elements insuring against all risks of direct, physical
loss commonly insured against or, in the case of a conversion building, against fire and extended
coverage perils. The total amount of insurance after application of any deductibles shall be not less
than eighty percent (80%) 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, foundations, and other items
normally excluded from property policies; and
     (2) 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 and any
property owned or leased by the association.
     (b) In the case of a building containing units having horizontal boundaries described in the
declaration, the insurance maintained under subdivision (a)(1), to the extent reasonably available,
shall include the units, but need not include improvements and betterments installed by unit owners.
     (c) If the insurance described in subsections (a) and (b) is not reasonably available, the
association promptly shall 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 in any event may carry any other insurance it deems appropriate to
protect the association or the unit owners.
     (d) Insurance policies carried pursuant to subsection (a) must provide that:
     (1) Each unit owner is an insured person under the policy with respect to liability arising
out of the 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 or
member of the owner's household;
     (3) 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
     (4) 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. Provided, however, a unit owner’s insurance policy shall become the primary insurance
policy with respect to any amount of loss covered by the association’s policy but not payable under
the association’s policy because of the application of the deductible.
     (e) Any loss covered by the property policy under subdivision (a)(1) and subsection (b)
must 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 or beneficiary under a deed of trust. The insurance trustee or the association shall hold
any insurance proceeds in trust for unit owners and lien holders as their interests may appear.
Subject to the provisions of subsection (h), the proceeds must be disbursed first for the repair or
restoration of the damaged property, and unit owners and lien holders are not entitled to receive
payment of any portion of the proceeds unless there is a surplus of proceeds after the property has
been completed, repaired or restored, or the condominium is terminated.
     (f) An insurance policy issued to the association does not prevent a unit owner from
obtaining insurance for his or her own benefit.
     (g) An insurer that has issued an insurance policy under this section shall issue certificates
or memoranda of insurance to the association and, upon written request, to any unit owner,
mortgagee, or beneficiary under a deed of trust. The insurer issuing the policy may not cancel or
refuse to renew it until thirty (30) days after notice of the proposed cancellation or nonrenewal has
been mailed to the association, each unit owner, and each mortgagee or beneficiary under a deed
of trust to whom a certificate or memorandum of insurance has been issued at their respective last
known addresses.
     (h) Any portion of the condominium for which insurance is required under this section that
is damaged or destroyed shall be repaired or replaced promptly by the association unless: (1) the
The condominium is terminated; (2) repair Repair or replacement would be illegal under any state
or local health or safety statute or ordinance; or (3) eighty Eighty percent (80%) of the unit owners,
including every owner of a unit or assigned, limited common element that will not be rebuilt, vote
not to rebuild unless insurance proceeds are adequate to rebuild. The cost of repair or replacement
in excess of insurance proceeds and reserves, after the application of the association’s policy
deductible, is a common expense, unless the declaration provides otherwise. If the entire
condominium is not repaired or replaced, (1) the The insurance proceeds attributable to the
damaged common elements must be used to restore the damaged area to a condition compatible
with the remainder of the condominium; (2) the The insurance proceeds attributable to units and
limited, common elements that are not rebuilt must 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 The remainder of the proceeds must 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 condemned under § 34-36.1-
1.07(a) and the association promptly shall prepare, execute, and record an amendment to the
declaration reflecting the reallocations. Notwithstanding the provisions of this subsection, § 34-
36.1-2.18 governs the distribution of insurance proceeds if the condominium is terminated.
     (i) In the event a unit owner sustains damage to the owner's unit as a result of an event that
is covered under the insurance coverage purchased in accordance with this section, then upon
written request to the condominium association, the unit owner shall be entitled to a written copy
from the condominium association of the insurance company damage appraisal or any damage
appraisal in regard to damage to the owner's unit, within fourteen (14) calendar days of the date of
the unit owner's request, or within fourteen (14) days of the association's receipt of the damage
appraisal, whichever is later. If coverage for the damage to a unit is denied for any reason or is
deemed to be valued below the policy deductible, then the unit owner shall also be entitled to
receive, from the association, a copy of the letter detailing the determination.
     (j) 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.
     SECTION 2. This act shall take effect upon passage.
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LC005612
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