WHEREAS, Centex/Taylor, LLC, a Delaware limited liability company, is the Declarant pursuant to a certain Declaration of Covenants, Conditions, Easements and Restrictions for GlenRiddle Community Association, Inc. (the “Declaration”, which term shall include any and all subsequent corrections, modifications and supplements thereof as may be recorded among the
Land Records of Worcester County, Maryland).
WHEREAS, pursuant to Article 10 of the Declaration, the Declarant is authorized to promulgate as Community Codes, rules, regulations, standards and guidelines governing the Community.
WHEREAS, Article 10 of the Declaration provides that Community Codes shall have the same force and effect and binding nature as the covenants, conditions, easements and restrictions contained within the Declaration and applicable to all Property within the Community.
WHEREAS, the Declarant desires to establish insurance requirements for the benefit
NOW THEREFORE, BE IT RESOLVED, that the Declarant hereby adopts the following Community Code regarding insurance requirements which, as may be modified or amended from time to time, shall be binding on all parties having any right, title or interest in all or any portion of the Community, their respective heirs, personal representatives, successors, transferees and assigns, as well as occupants, guests and invitees, and shall inure to the benefit of each Owner thereof.
Unless otherwise defined herein, capitalized terms used herein shall have the same meanings as are set forth for them in the Declaration.
Insurance Requirements for GlenRiddle Community Association, Inc.
1. Required Coverage.
The Board of Directors or its duly authorized agent, shall obtain and continue in effect the following types of insurance, if reasonably available, or if not reasonably available, the most nearly equivalent coverages as are reasonably available:
(a) Blanket property insurance covering “risks of direct physical loss” on a “special form” basis (or comparable coverage by whatever name denominated) for all insurable improvements within the Community Property, as well as all insurable improvements within the Community Areas to the extent that the Association has assumed responsibility for maintenance, repair and/or replacement in the event of a casualty for the Community Areas. The Association shall have the authority to insure any privately or publicly owned property for which the Association has maintenance or repair responsibility. Such property may include, by way of illustration and not limitation, any insurable improvements on or related to park areas, rights-of way, medians, easements, and walkways which the Association is obligated to maintain. If such coverage is not generally available at reasonable cost, the “broad form” coverage may be substituted. All property insurance policies obtained on behalf of the Association shall have policy limits sufficient to cover the full replacement cost of the insured improvements less a reasonable deductible;
(b) Commercial general liability insurance on the Community Areas insuring the Association and its Members for damage or injury caused by the negligence of the Association or any of its Members, employees, agents, or contractors while acting on its behalf. If generally available at a reasonable cost, the commercial general liability coverage (including both primary and any umbrella policies) shall have a limit of at least $5,000,000.00 per occurrence with respect to bodily injury, personal injury, and property damage; provided, should additional coverage and higher limits be available at reasonable cost, the Board of Directors, may (but shall not be required to) obtain such additional coverages or limits;
(c ) Workers compensation insurance and employers liability insurance;
(d) Directors and officers liability coverage;
(e) Fidelity insurance covering all Persons responsible for handling Association funds in an amount determined in the Board of Directors’ best business judgment. Fidelity insurance policies shall include coverage for officers, directors and other persons serving without compensation; and
(f) Such additional insurance as the Board of Directors, in its reasonable judgment, determines advisable, which may include, without limitation, flood insurance, boiler and machinery insurance, and building ordinance coverage.
In addition, the Association may obtain and maintain property insurance on the insurable improvements within any Local Area in such amounts and with such coverages as determined by the Board of Directors, including, without limitation, with respect to the Cottage Homes pursuant to Section 5.14 of the Declaration.
Premiums for all insurance on the Community Areas shall be Common Expenses and shall be included in the Annual Assessment, except that (i) premiums for property insurance obtained on behalf of a Local Area shall be charged to the Owners of Living Units within the benefited Local Area as a Local Area Assessment; and (ii) premiums for insurance on Exclusive Community Property may be included in the Local Area Assessment of the Local Area(s) benefited unless the Board of Directors reasonably determines that other treatment of the premiums is more appropriate.
2. Policy Requirements.
(a) The Board of Directors shall arrange for a periodic review of the sufficiency of insurance coverage by one or more qualified Persons, at least one of whom must be familiar with insurable replacement costs in Worcester County, Maryland.
(b) The policies may contain a reasonable deductible and the amount thereof shall not be subtracted from the face amount of the policy in determining whether the policy limits satisfy the requirements of Paragraph 2(a) above. In the event of an insured toss, the deductible shall be treated as a Common Expense or a Local Area Expense in the same manner as the premiums for
the applicable insurance coverage. However, if the Board of Directors reasonably determines, after notice and an opportunity to be heard in accordance with the Bylaws, that the loss is the result of the negligence or willful misconduct of one or more Owners, their guests, invitees, or lessees, then the Board of Directors may specifically assess the full amount of such deductible against such Owner(s) and their Living Units.
(c ) All insurance coverage obtained by the Board of Directors shall:
(i) Be written with a company whose primary business is providing insurance coverage and which is authorized to conduct business in the State of Maryland and which satisfies the requirements of the Federal National Mortgage Association, or such other secondary mortgage market agencies or federal agencies as the Board of Directors deems appropriate;
(ii) Be written in the name of the Association as trustee for the benefited parties. Policies on the Community Areas shall be for the benefit of the Association and its Members. Policies, if any, secured by the Association on behalf of a Local Area shall be for the benefit of the Owners of Living Units within the Local Areas and their Mortgagees, as their interests may appear;
(iii) Not be brought into contribution with insurance purchased by individual Owners, occupants, or their Mortgagees; and
(iv) Include an agreed amount endorsement, if the policy contains a co-insurance clause.
(d) The Board of Directors shall use reasonable efforts to secure insurance policies which name the Owners and their Mortgagees (as a class) as additional insureds and provide:
(i) A waiver of subrogation as to any claims against the Association, the Association’s Board of Directors, officers, employees and manager, the Owners and their tenants, servants, agents, and guests;
(ii) A waiver of the insurer’s rights to repair and reconstruct instead of paying cash;
(iii) An endorsement excluding Owners’ individual policies from consideration under any “other insurance” clause;
(iv) An endorsement requiring at least thirty (30) days’ prior written notice to the Association of any cancellation, substantial modification, or non-renewal;
(v) A cross liability provision; and
(vi) A provision vesting in the Board of Directors exclusive authority to adjust losses; provided, however, no Mortgagee having an interest in such losses may be prohibited from participating in the settlement negotiations, if any, related to the loss.
3. Repair After Damage and Destruction.
(a) Immediately after damage or destruction to all or any part of the Community Area covered by insurance written in the name of the Association, the Board of Directors or its duly authorized agent shall file all insurance claims and obtain reliable and detailed estimates of the cost of repair and reconstruction. Repair or reconstruction, as used in this paragraph, means repairing or restoring the property to substantially the condition in which it existed prior to the damage, allowing for changes or improvements necessitated by changes in applicable building codes.
(b) Any damage to or destruction of the Community Areas for which insurance proceeds have been paid to the Association shall be repaired or reconstructed unless a decision not to repair or reconstruct is made within sixty (60) days after the loss by Owners entitled to cast at feast fifty-one percent (51%) of the votes of all Owners and by the vote of Declarant (during the Declarant’s Rights and Obligations Period). If the insurance proceeds and reliable and detailed estimates of the cost of repair or reconstruction are not available to the Association within such sixty (60)-day period, then the period shall be extended until such funds and information is available. However, such extension shall not exceed an additional sixty (60) days.
(c ) If determined in the manner described above that the damage or destruction to the Community Areas shall not be repaired or reconstructed and no alternative improvements are authorized, the affected property shall be cleared of all debris and thereafter shall be maintained by the Association in a neat and attractive manner.
(d) All insurance proceeds remaining after paying the costs of any repair or reconstruction shall be retained by and for the benefit of the Association or the Local Area, as appropriate.
(e) If insurance proceeds received, after application of any applicable deductible, are insufficient to cover the costs of repair or reconstruction, the Board of Directors may, without a vote of the Members, levy Special Assessments to cover the shortfall against those Owners, other than the Declarant, responsible for the premiums for the applicable insurance coverage.
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