ORS 100.435: Insurance for individual units and common elements; fidelity bond.

(1) If the bylaws provide that the association of unit owners has the sole authority to decide whether to repair or reconstruct a unit that has suffered damage or that a unit must be repaired or reconstructed, the board of directors shall obtain and maintain at all times and shall pay for out of the common expense funds, the following insurance covering both the common elements and individual units: (a) Property insurance including, but not limited to, fire, extended coverage, vandalism and malicious mischief; and (b) Insurance covering the legal liability of the association of unit owners, the unit owners individually and the manager including, but not limited to, the board of directors, the public and the unit owners and their invitees or tenants, incident to ownership, supervision, control or use of the property. There may be excluded from the policy required under this paragraph, coverage of a unit owner, other than coverage as a member of the association of unit owners or board of directors, for liability arising out of acts or omissions of that unit owner and liability incident to the ownership or use of the part of the property as to which that unit owner has the exclusive use or occupancy. Liability insurance required under this paragraph shall be issued on a comprehensive liability basis and shall provide a cross liability indorsement providing that the rights of a named insured under the policy do not prejudice any action against another named insured. (2) If the bylaws require the individual unit owners to obtain insurance for their units, the bylaws also shall contain a provision requiring the board of directors to obtain the following insurance covering the common elements: (a) Property insurance including, but not limited to, fire, extended coverage, vandalism and malicious mischief; and (b) Insurance covering the legal liability of the association of unit owners and the manager including, but not limited to, the board of directors, to the public or the unit owners and their invitees or tenants, incident to supervision, control or use of the property. (3) The board of directors shall obtain, if reasonably available, terms in insurance policies under this section that provide a waiver of subrogation by the insurer as to any claims against the board of directors of the association. (4) Notwithstanding a provision in the declaration or bylaws of a condominium, including a condominium created before September 27, 2007, that imposes a maximum deductible amount of $10,000 or less in an association insurance policy, if the board of directors determines that it is in the best interest of the association of unit owners and of the unit owners, as provided in subsection (5) of this section, the board may adopt a resolution authorizing the association to obtain and maintain an insurance policy with a deductible amount exceeding the specified maximum, but not in excess of the greater of: (a) The maximum deductible acceptable to the Federal National Mortgage Association; or (b) $10,000. (5) In making the determination under subsection (4) of this section, the board of directors shall consider such factors as the availability and cost of insurance and the loss experience of the association. (6) If the declaration or bylaws of a condominium created before September 27, 2007, do not assign the responsibility for payment of the amount of the deductible in an association insurance policy, the board of directors may adopt a resolution that assigns the responsibility for payment of the amount of the deductible. The resolution must include, but need not be limited to: (a) The circumstances under which the deductible will be charged against: (A) A unit owner or the unit owners affected by a loss; or (B) All unit owners; (b) The allocation of the deductible charged under paragraph (a) of this subsection; and (c) If a unit owner and the association have duplicate insurance coverage, the insurance policy that is primary, unless otherwise provided in the declaration or bylaws. (7) If the board of directors adopts a resolution described in subsection (6) of this section, the resolution may require that a unit owner, in addition to any other insurance required by the declaration or bylaws, obtain and maintain: (a) An insurance policy that insures the unit owner’s unit and appurtenant limited common elements for not less than the amount of the deductible in the association’s insurance policy for which the unit owner may be responsible and that insures the unit owner’s personal property for any loss or damage; and (b) Comprehensive liability insurance that includes, but is not limited to, coverage for negligent acts of unit owners and tenants, guests of unit owners and tenants and occupants of other units for damage to the general and limited common elements, to other units and to the personal property of other persons that is located in other units or the common elements. (8) Unless otherwise provided in the declaration or bylaws, the board of directors may adopt a resolution that: (a) Prescribes a procedure for processing insurance claims. The procedure may require that all claims against the association’s insurance policy be processed through and coordinated by the board of directors or the managing agent, if authorized by the board. (b) Assigns the responsibility for payment of charges for handling claims, including any charges by a managing agent. (9) Not later than 10 days after adoption of a resolution under subsection (4), (6) or (8) of this section, the board of directors shall ensure that a copy of the resolution and a notice described in subsection (10) of this section are: (a) Delivered to each unit owner; or (b) Mailed to the mailing address of each unit owner or to the mailing address designated in writing by the unit owner. (10) The notice required under subsection (9) of this section shall: (a) Advise the unit owner to contact the unit owner’s insurance agent to determine the effect of the resolution on the unit owner’s individual insurance coverage; and (b) Be in a form and style reasonably calculated to inform the unit owner of the importance of the notice. (11) Failure to provide a copy of a resolution or a notice required under this section does not affect the responsibility of a unit owner to comply with a resolution adopted under this section. (12)(a) An association of unit owners shall maintain fidelity bond coverage for: (A) All persons with access to association funds, including directors, officers, employees, managing agents and employees of a management company or entity with which the association contracts. (B) Computer fraud and funds transfer fraud. (b) The fidelity bond required under paragraph (a) of this subsection must be in an amount that is at least equal to the combined amount of: (A) Funds maintained in the name of the association in accounts under ORS 100.480; and (B) Any obligations issued by the United States government purchased by the association under ORS 100.480. (13) Subsection (12) of this section applies to a condominium created before, on or after January 1, 2020. (14) Following the turnover meeting described in ORS 100.210, on an annual basis, with the approval of owners representing a majority of the voting rights present at a meeting, the board of directors may elect for the following year to not maintain the fidelity bond coverage required under subsection (12)(a) of this section or to maintain fidelity bond coverage in an amount less than required under subsection (12)(b) of this section. [Formerly 94.177; 1999 c.677 §50; 2007 c.409 §31; 2019 c.66 §2]