[ Back ] [ Bottom ]
92_SB1046ren
SB1046 Re-enrolled LRB9202778DJcs
1 AN ACT in relation to property.
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 Sections 12 and 12.1 as follows:
6 (765 ILCS 605/12)
7 Sec. 12. Insurance.
8 (a) Required coverage. No policy of insurance shall be
9 issued or delivered to a condominium association, and no
10 policy of insurance issued to a condominium association shall
11 be renewed, unless the insurance coverage under the policy
12 includes the following:
13 (1) Property insurance. Property insurance (i) on
14 the common elements and the units, including the limited
15 common elements and except as otherwise determined by the
16 board of managers, the bare walls, floors, and ceilings
17 of the unit, (ii) providing coverage for special form
18 causes of loss, and (iii) in a total amount of not less
19 than the full insurable replacement cost of the insured
20 property, less deductibles, but including coverage for
21 the increased costs of construction due to building code
22 requirements, at the time the insurance is purchased and
23 at each renewal date.
24 (2) General liability insurance. Commercial general
25 liability insurance against claims and liabilities
26 arising in connection with the ownership, existence, use,
27 or management of the property in a minimum amount of
28 $1,000,000, or a greater amount deemed sufficient in the
29 judgment of the board, insuring the board, the
30 association, the management agent, and their respective
31 employees and agents and all persons acting as agents.
SB1046 Re-enrolled -2- LRB9202778DJcs
1 The developer must be included as an additional insured
2 in its capacity as a unit owner, manager, board member,
3 or officer. The unit owners must be included as
4 additional insured parties but only for claims and
5 liabilities arising in connection with the ownership,
6 existence, use, or management of the common elements. The
7 insurance must cover claims of one or more insured
8 parties against other insured parties.
9 (3) Fidelity bond; directors and officers coverage.
10 (A) An association with 6 or more dwelling
11 units must obtain and maintain a fidelity bond
12 covering persons, including the managing agent and
13 its employees who control or disburse funds of the
14 association, for the maximum amount of coverage
15 available to protect funds in the custody or control
16 of the association, plus the association reserve
17 fund.
18 (B) All management companies that are
19 responsible for the funds held or administered by
20 the association must be covered by a fidelity bond
21 for the maximum amount of coverage available to
22 protect those funds. The association has standing to
23 make a loss claim against the bond of the managing
24 agent as a party covered under the bond.
25 (C) For purposes of paragraphs (A) and (B),
26 the fidelity bond must be in the full amount of
27 association funds and reserves in the custody of the
28 association or the management company.
29 (D) The board of directors must obtain
30 directors and officers liability coverage at a level
31 deemed reasonable by the board, if not otherwise
32 established by the declaration or bylaws. Directors
33 and officers liability coverage must extend to all
34 contracts and other actions taken by the board in
SB1046 Re-enrolled -3- LRB9202778DJcs
1 their official capacity as directors and officers,
2 but this coverage shall exclude actions for which
3 the directors are not entitled to indemnification
4 under the General Not For Profit Corporation Act of
5 1986 or the declaration and bylaws of the
6 association.
7 (b) Contiguous units; improvements and betterments. The
8 insurance maintained under subdivision (a)(1) must include
9 the units, the limited common elements except as otherwise
10 determined by the board of managers, and the common elements.
11 The insurance need not cover improvements and betterments to
12 the units installed by unit owners, but if improvements and
13 betterments are covered, any increased cost may be assessed
14 by the association against the units affected.
15 Common elements include fixtures located within the
16 unfinished interior surfaces of the perimeter walls, floors,
17 and ceilings of the individual units initially installed by
18 the developer. Common elements exclude floor, wall, and
19 ceiling coverings. "Improvements and betterments" means all
20 decorating, fixtures, and furnishings installed or added to
21 and located within the boundaries of the unit, including
22 electrical fixtures, appliances, air conditioning and heating
23 equipment, water heaters, or built-in cabinets installed by
24 unit owners.
25 (c) Deductibles. The board of directors of the
26 association may, in the case of a claim for damage to a unit
27 or the common elements, (i) pay the deductible amount as a
28 common expense, (ii) after notice and an opportunity for a
29 hearing, assess the deductible amount against the owners who
30 caused the damage or from whose units the damage or cause of
31 loss originated, or (iii) require the unit owners of the
32 units affected to pay the deductible amount.
33 (d) Other coverages. The declaration may require the
34 association to carry any other insurance, including workers
SB1046 Re-enrolled -4- LRB9202778DJcs
1 compensation, employment practices, environmental hazards,
2 and equipment breakdown, the board of directors considers
3 appropriate to protect the association, the unit owners, or
4 officers, directors, or agents of the association.
5 (e) Insured parties; waiver of subrogation. Insurance
6 policies carried pursuant to subsections (a) and (b) must
7 include each of the following provisions:
8 (1) Each unit owner and secured party is an insured
9 person under the policy with respect to liability arising
10 out of the unit owner's interest in the common elements
11 or membership in the association.
12 (2) The insurer waives its right to subrogation
13 under the policy against any unit owner of the
14 condominium or members of the unit owner's household and
15 against the association and members of the board of
16 directors.
17 (3) The unit owner waives his or her right to
18 subrogation under the association policy against the
19 association and the board of directors.
20 (f) Primary insurance. If at the time of a loss under
21 the policy there is other insurance in the name of a unit
22 owner covering the same property covered by the policy, the
23 association's policy is primary insurance.
24 (g) Adjustment of losses; distribution of proceeds. Any
25 loss covered by the property policy under subdivision (a)(1)
26 must be adjusted by and with the association. The insurance
27 proceeds for that loss must be payable to the association, or
28 to an insurance trustee designated by the association for
29 that purpose. The insurance trustee or the association must
30 hold any insurance proceeds in trust for unit owners and
31 secured parties as their interests may appear. The proceeds
32 must be disbursed first for the repair or restoration of the
33 damaged common elements, the bare walls, ceilings, and floors
34 of the units, and then to any improvements and betterments
SB1046 Re-enrolled -5- LRB9202778DJcs
1 the association may insure. Unit owners are not entitled to
2 receive any portion of the proceeds unless there is a surplus
3 of proceeds after the common elements and units have been
4 completely repaired or restored or the association has been
5 terminated as trustee.
6 (h) Mandatory unit owner coverage. The board of
7 directors may, under the declaration and bylaws or by rule,
8 require condominium unit owners to obtain insurance covering
9 their personal liability and compensatory (but not
10 consequential) damages to another unit caused by the
11 negligence of the owner or his or her guests, residents, or
12 invitees, or regardless of any negligence originating from
13 the unit. The personal liability of a unit owner or
14 association member must include the deductible of the owner
15 whose unit was damaged, any damage not covered by insurance
16 required by this subsection, as well as the decorating,
17 painting, wall and floor coverings, trim, appliances,
18 equipment, and other furnishings.
19 If the unit owner does not purchase or produce evidence
20 of insurance requested by the board, the directors may
21 purchase the insurance coverage and charge the premium cost
22 back to the unit owner. In no event is the board liable to
23 any person either with regard to its decision not to purchase
24 the insurance, or with regard to the timing of its purchase
25 of the insurance or the amounts or types of coverages
26 obtained.
27 (i) Certificates of insurance. Contractors and vendors
28 (except public utilities) doing business with a condominium
29 association under contracts exceeding $10,000 per year must
30 provide certificates of insurance naming the association, its
31 board of directors, and its managing agent as additional
32 insured parties.
33 (j) Non-residential condominiums. The provisions of this
34 Section may be varied or waived in the case of a condominium
SB1046 Re-enrolled -6- LRB9202778DJcs
1 community in which all units are restricted to nonresidential
2 use.
3 (k) Settlement of claims. Any insurer defending a
4 liability claim against a condominium association must notify
5 the association of the terms of the settlement no less than
6 10 days before settling the claim. The association may not
7 veto the settlement unless otherwise provided by contract or
8 statute. ) (a) (1) The board of managers shall have the
9 authority to and shall obtain, except as otherwise provided
10 in Section 12.1, insurance for the property against loss or
11 damage by fire and such other hazards as are covered under
12 standard extended coverage provisions for the full insurable
13 replacement cost of the common elements and the units. Every
14 insurer issuing a policy against loss or damage by fire and
15 such other hazards as are covered under standard extended
16 coverage to a condominium association shall print on or
17 attach to the premium notice the following statement: "The
18 Condominium Property Act requires every condominium
19 association to obtain insurance for the property against loss
20 or damage by fire and such other hazards as are covered under
21 the standard extended coverage provisions for the full
22 insurable replacement costs. This policy may or may not
23 satisfy this requirement. Please examine your policy
24 carefully to determine if it complies with these
25 requirements." The full insurable replacement cost of the
26 units may include the replacement cost value of betterments
27 and improvements made in and to a unit by a unit owner if it
28 is so provided by the condominium declaration, and if it is
29 so provided in the condominium instruments, any increase
30 premium charge therefor shall be assessed to that unit owner
31 under the provisions of Section 9 hereof.
32 (2) Such insurance coverage shall be written in the name
33 of, and the proceeds thereof shall be deemed payable to, the
34 board of managers, as trustee for each of the unit owners in
SB1046 Re-enrolled -7- LRB9202778DJcs
1 the percentages established in the declaration. Any insurance
2 policy obtained for the property pursuant to paragraph (1) of
3 subsection (a) of this Section, which fails to contain the
4 trustee provisions required by this paragraph (2), shall be
5 deemed to incorporate such provisions into the policy by
6 operation of law.
7 (3) The board of managers, or the persons acting in such
8 capacity pursuant to Section 18.2 of this Act, shall have
9 authority to designate any corporation qualified to accept
10 and execute trusts in this state to act as agent or trustee
11 for, or as successor trustee to, said board of managers for
12 the purpose of collecting and disbursing the proceeds of such
13 insurance in the manner provided by the declaration, the
14 bylaws, and this Act. Premiums for such insurance and other
15 expenses in connection therewith shall be common expenses.
16 (b) The board of managers shall have the authority and
17 duty to obtain comprehensive public liability insurance
18 against claims and liabilities arising in connection with the
19 ownership, existence, use or management of the property in
20 amounts, if any, specified by the condominium instruments or
21 otherwise deemed sufficient in the judgment of the board of
22 managers, insuring the board of managers, the unit owners'
23 association, the management agent, and their respective
24 employees, agents and all persons acting as agents. The
25 developer shall be included as an additional insured in his
26 capacity as unit owner and board member. The unit owners
27 shall be included as additional insureds but only with
28 respect to that portion of the premises not reserved for
29 their exclusive use. The insurance shall cover claims of one
30 or more insured parties against other insured parties. The
31 insurance shall contain a waiver of any rights to subrogation
32 by the insuring company against any of the above named
33 insured persons. Premiums for such insurance shall be common
34 expenses.
SB1046 Re-enrolled -8- LRB9202778DJcs
1 (c) The board of managers shall notify insured persons
2 concerning the cancellation of insurance obtained pursuant to
3 the terms of this Section.
4 (d) Any insurer defending a claim against a condominium
5 association shall notify the association of the terms of the
6 settlement before settling the claim. The association shall
7 not have power to veto such settlement, unless otherwise
8 provided by contract or statute.
9 (Source: P.A. 84-1431; 84-1464.)
10 (765 ILCS 605/12.1) (from Ch. 30, par. 312.1)
11 Sec. 12.1. Insurance risk pooling trusts.
12 (a) This Section shall be known and may be cited as the
13 Condominium and Common Interest Community Risk Pooling Trust
14 Act.
15 (b) The boards of managers or boards of directors, as
16 the case may be, of two or more condominium associations or
17 common interest community associations, are authorized to
18 establish, with the unit owners and the condominium or common
19 interest community associations as the beneficiaries thereof,
20 a trust fund for the purpose of providing protection of the
21 participating condominium and common interest community
22 associations against the risk of financial loss due to damage
23 to, destruction of or loss of property, or the imposition of
24 legal liability as required or authorized under this Act or
25 the declaration of the condominium or common interest
26 community association. Such trust fund shall initially
27 assess unit owners an amount actuarially adequate to
28 establish such fund and shall assess such amounts as are
29 required to maintain such fund. Such amounts may be treated
30 as assessments of the condominium or common interest
31 community association.
32 (c) The trust fund shall be established and amended only
33 by a written instrument which shall be filed with and
SB1046 Re-enrolled -9- LRB9202778DJcs
1 approved by the Director of Insurance prior to its becoming
2 effective. The Director of Insurance shall withhold approval
3 of any instrument if it does not comply with the provisions
4 of this Section or any rule or regulation of the Director of
5 Insurance.
6 (d) No common interest community association shall be a
7 beneficiary of the trust fund unless it either shall be
8 incorporated under the laws of this State or shall have first
9 procured a Certificate of Authority from the Secretary of
10 State.
11 (e) The trust fund is authorized to indemnify the
12 condominium and common interest community association
13 beneficiaries thereof against the risk of loss due to damage,
14 destruction or loss to property or imposition of legal
15 liability as required or authorized under this Act or the
16 declaration of the condominium or common interest community
17 association. The trustee of the trust fund may determine and
18 establish contributions to the trust fund actuarially
19 required to fund the operations and carry out the purposes of
20 the trust fund and may enter into contracts in order to carry
21 out the purposes for which the trust fund was established,
22 provided however, that any such contracts shall not provide
23 for compensation or payments in excess of that which is
24 reasonable in relation to the services actually performed
25 thereunder.
26 (f) The trust fund may enter into written agreements
27 with other trust funds established under this Section whereby
28 the Risks assumed by the any such trust fund may be pooled
29 and shared with such other trust funds established under this
30 Section.
31 (g) (Blank). The trustees of all trust funds established
32 under this Act shall be natural persons over the age of 18
33 who are residents of this State.
34 (h) (Blank). Every such trust fund shall have no fewer
SB1046 Re-enrolled -10- LRB9202778DJcs
1 than 3 nor more than 30 trustees. No less than 2/3 of the
2 trustees shall be officers, directors, trustees or full time
3 employees of a condominium or common interest community
4 association beneficiary of the trust fund.
5 (i) No trustee of the trust fund shall be paid a salary
6 or receive other compensation, except that the written trust
7 instrument may provide for reimbursement for actual expenses
8 incurred on behalf of the trust fund. No trustee or any
9 employer or affiliate of any trustee of the trust fund shall
10 enter into any contract with the trust fund for, or receive
11 any monies or other compensation or thing of value whatsoever
12 from, the trust fund for services performed for or on behalf
13 of such trust fund, except as otherwise provided in this
14 Section.
15 (j) (Blank). The trustees shall serve pursuant to the
16 terms of the written trust instrument except that the written
17 trust instrument shall set forth the manner in which a
18 trustee of a trust fund may be removed and the manner in
19 which vacancies among the trustees of the trust fund may be
20 filled.
21 (k) (Blank). No trustee of the trust fund shall serve
22 for more than 3 consecutive years unless he is reappointed in
23 the manner provided for in the written trust instrument.
24 (l) (Blank). The trustees of the trust fund shall have
25 the powers specified in the written trust instrument which
26 established the trust fund.
27 (m) Each trust fund shall by June 1 of each year file
28 annually with the Director of Insurance a full independently
29 audited financial statement. as of December 31 of the
30 preceding year, and by April 1 of each year a report of the
31 trustees of the trust fund detailing the operations of the
32 trust fund and including a list of all beneficiaries during
33 the year and a statement that each beneficiary was not
34 ineligible except as provided for in this Section. The truth
SB1046 Re-enrolled -11- LRB9202778DJcs
1 and accuracy of the financial statement and report shall be
2 attested to by each trustee. The financial statement shall
3 include the opinion of an independent certified public
4 accountant on the financial condition of the trust fund for
5 the most recent calendar year and the results of its
6 operations, changes in financial position and changes in
7 capital and surplus for the year then ended in conformity
8 with accounting practices permitted or prescribed by the
9 Illinois Department of Insurance.
10 (n) (Blank). A beneficiary is ineligible if he or she
11 ceases to be a unit owner of a condominium or common interest
12 community association, except where liability of such
13 beneficiary was incurred at the time he or she was a unit
14 owner.
15 (o) (Blank). No beneficiary shall have any cause of
16 action against any other beneficiary arising solely out of
17 the insolvency or inability of the trust fund to meet its
18 obligations, unless such other beneficiary is a trustee of
19 such trust fund and has breached a fiduciary duty in
20 connection with such trust fund. This subsection shall not
21 preclude the assessment and collection of any payments to the
22 trust fund to correct such insolvency or inability of the
23 trust fund to meet its obligations.
24 (p) (Blank). No trust fund established under this
25 subsection (d) shall grant any power to the trustees of the
26 trust fund which is inconsistent with this Section or any
27 other law of this State.
28 (q) (Blank). Every trust fund established hereunder
29 shall include in the written trust instrument the basis upon
30 which payments are made to and from the trust fund.
31 (r) (Blank). Trust funds established under this Section
32 and all persons interested therein or dealing therewith shall
33 be subject to the provisions of Sections 133, 144, 144.1,
34 149, 401, 401.1, 402, 403, 403A, 412, and all of the
SB1046 Re-enrolled -12- LRB9202778DJcs
1 provisions of Articles VII, VIII, VIII 1/2, XII 1/2, and XIII
2 of the Illinois Insurance Code. Except as otherwise provided
3 in this Section, trust funds established under and which
4 fully comply with this Section shall not be subject to any
5 other provision of the Illinois Insurance Code.
6 (s) The Director of Insurance shall have with respect to
7 trust funds established under this Section the powers of
8 examination conferred upon him relative to insurance
9 companies by Section Sections 132 through 132.7 of the
10 Illinois Insurance Code. The cost of any such examination
11 shall be paid by the trust fund examined.
12 (t) (Blank). The Director of Insurance shall charge,
13 collect and give proper acquittances for the payment of the
14 following fees and charges:
15 (i) For filing trust instruments, amendments
16 thereto and financial statement and report of the
17 trustees, $25.
18 (ii) For copies of papers or records per page, $1.
19 (iii) For certificate to copy of paper, $5.
20 (iv) For filing an application for the licensing of
21 a condominium risk pooling trust, $500.
22 (u) (Blank). This Section shall apply regardless of any
23 contrary provisions of any instrument.
24 (v) Trust funds established under and which fully comply
25 with this Section shall not be considered member insurance
26 companies or to be in the business of insurance nor shall the
27 provision of Article XXXIV of the Illinois Insurance Code
28 apply to any such trust fund established under this Section.
29 (w) (Blank). The provisions of the Administrative Review
30 Law shall apply to and govern all proceedings for the
31 judicial review of final administrative decisions under this
32 Section.
33 (x) The Director of Insurance shall adopt reasonable
34 rules pertaining to the standards of coverage and
SB1046 Re-enrolled -13- LRB9202778DJcs
1 administration of trust funds authorized under this Section.
2 (Source: P.A. 89-97, eff. 7-7-95.)
[ Top ]