                                 CODE OF VIRGINIA

INSURANCE (§ 55.1-2145)

A. Commencing not later than the time of the first conveyance of a cooperative
interest to a person other than a declarant, the association shall maintain to
the extent reasonably available:

   1. Property insurance on the common elements and units 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 80 percent 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 units.

B. If the insurance described in subsection A is not reasonably available, the
association shall notify all proprietary lessees by hand delivery or by United
States mail, sent prepaid. The declaration may require the association to carry
any other insurance, and the association may carry any other insurance it deems
appropriate to protect the association or the proprietary lessees.

C. Insurance policies carried pursuant to subsection A must provide that:

   1. Each proprietary lessee is an insured person under the policy with respect
   to liability arising out of his interest in the common elements or membership
   in the association;

   2. The insurer waives its right to subrogation under the policy against any
   proprietary lessee or member of his household;

   3. No act or omission by any proprietary lessee, unless acting within the
   scope of his 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 proprietary lessee covering the same risk covered by the policy, the
   association&#8217;s policy provides primary insurance.

D. Any loss covered by the property policy under subdivision A 1 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 the association, proprietary lessees, and lien holders as their
interests may appear. Subject to the provisions of subsection G, the proceeds
must be disbursed first for the repair or restoration of the damaged property.
The association, proprietary lessees, 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 completely repaired or restored, or the
cooperative is terminated.

E. An insurance policy issued to the association does not prevent a proprietary
lessee from obtaining insurance for his own benefit.

F. 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 proprietary lessee or holder of a security interest. The insurer
issuing the policy may not cancel or refuse to renew it until 30 days after
notice of the proposed cancellation or nonrenewal has been mailed to the
association, each proprietary lessee, and each holder of a security interest to
whom a certificate or memorandum of insurance has been issued at their
respective last known address.

G. Any portion of the cooperative for which insurance is required under this
section that is damaged or destroyed shall be repaired or replaced promptly by
the association unless (i) the cooperative is terminated; (ii) repair or
replacement would be illegal under any state or local health or safety statute
or ordinance; or (iii) 80 percent of the proprietary lessees, including every
proprietary lessee of a unit or assigned limited common element that will not be
rebuilt, vote not to rebuild. The cost of repair or replacement in excess of
insurance proceeds and reserves is a common expense. If the entire cooperative
is not repaired or replaced, (a) 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 cooperative and (b) except to the extent
that other persons will be distributees, the insurance proceeds attributable to
units and limited common elements that are not rebuilt must be distributed to
the proprietary lessees of those units and the proprietary lessees of the units
to which those limited common elements were allocated, or to lien holders, as
their interests may appear, and the remainder of the proceeds must be
distributed to all the proprietary lessees or lien holders, as their interests
may appear, in proportion to the common expense liabilities of all the
cooperative interests. If the proprietary lessees vote not to rebuild any unit,
the allocated interests of the cooperative interest of which that unit is a part
are automatically reallocated upon the vote as if the unit had been condemned
under subsection A of &#xA7; 55.1-2105, and the association shall promptly
prepare, execute, and record an amendment to the declaration reflecting the
reallocations. Notwithstanding the provisions of this subsection, &#xA7;
55.1-2128 governs the distribution of insurance proceeds if the cooperative is
terminated.

H. The provisions of this section may be varied or waived in the case of a
cooperative whose units are all restricted to nonresidential use.

HISTORY: 1982, c. 277, § 55-470; 2019, c. 712.