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The 191st General Court of the Commonwealth of Massachusetts

Section 26: Insurance

Section 26. (a) Commencing not later than the time a developer offers a time-share for sale in a time-share property in which the number of time-shares is more than twelve, the managing entity shall maintain, to the extent reasonably available and applicable and not otherwise agreed by the time-share owners or provided by the developer or by a person managing a project of which the time-share property is a part:

(1) fire, extended coverage and all risk insurance on the time-share property and any personal property available for use by time-share owners in conjunction therewith, other than personal property separately owned by a time-share owner, in a total amount, after application of any deductibles, of not less than ninety per cent of the full replacement value of the insured property, exclusive of land excavations, foundations, and other items normally excluded from property policies; and

(2) comprehensive public liability insurance, including medical payments insurance, in an amount determined by the managing entity but not less than any amount specified in the time-share instrument, 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 time-share property and time-share units.

(b) If the insurance described in subsection (a) is not reasonably available, the managing entity promptly shall cause notice of said fact to be hand-delivered or sent by prepaid mail to all time-share owners. The managing entity shall make copies of all insurance policies available for inspection by the time-share owners during normal business hours. The time-share instrument may require the managing entity to maintain any other insurance, and the managing entity in any event may maintain any other insurance deemed appropriate.

(c) Each insurance policy maintained pursuant to subsection (a) shall provide that:

(1) each time-share owner is an insured person under the policy whether designated as an insured by name individually or as part of a named group or otherwise, as his interest may appear;

(2) the insurer waives its right to subrogation under the policy against any time-share owner or members of his household;

(3) no act or omission of any time-share owner, unless acting within the scope of his authority on behalf of an association, will void the policy or be a condition to recovery by any other person under the policy; and

(4) if, at the time of a loss under the policy, there is other insurance in the name of a time-share owner covering the same risk covered by the policy, the policy maintained pursuant to subsection (a) shall be primary insurance not contributing with the other insurance, and other insurance in the name of a time-share owner shall apply only to loss in excess of the primary coverage.

(d) Unless the insurance required by clause (1) of subsection (a) is provided by a person managing a project of which the time-share property is a part, any loss covered by said insurance shall be adjusted with, and the insurance proceeds from said loss payable to, the insurance trustee, who may be a party in interest, designated in accordance with the time-share instrument. If no insurance trustee has been designated or if the designated trustee fails to serve, the managing entity shall be the insurance trustee. The insurance trustee shall hold any insurance proceeds in trust for time-share owners and lien holders as their interests may appear and be determined in accordance with the provisions of section fifteen. Subject to the provisions of subsection (g), the proceeds shall be disbursed for the repair or restoration of the property, and time-share owners and lien holders shall not be entitled to receive payment of any portion of the proceeds unless there is (i) a surplus of proceeds after the property has been completely repaired or restored, or (ii) a termination pursuant to section fifteen.

(e) An insurance policy issued pursuant to subsection (a) shall not prevent a time-share owner 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 any association and, upon written request, to any time-share owner or mortgagee. The insurance may not be cancelled until thirty days after notice of the proposed cancellation has been mailed to any managing entity and each person to whom a certificate or memorandum of insurance has been issued, at their last known address.

(g) Any portion of the time-share property damaged or destroyed shall be repaired or replaced promptly by the managing entity unless (i) another person repairs or replaces it, (ii) there is a termination, (iii) repair or replacement would be illegal, (iv) eighty per cent of the time-share owners, including every owner of a time-share in a time-share unit that will not be rebuilt, vote not to rebuild, or (v) a decision not to rebuild the damaged property is made by another person empowered to make said decision. The cost of repair or replacement in excess of insurance proceeds and reserves shall be a time-share expense. If the entire property need not be repaired or replaced, unless the time-share instrument provides otherwise, (i) the insurance proceeds attributable to the damaged area shall be used to restore the damaged area to a condition comparable to the remainder of the property, and (ii) the insurance proceeds attributable to time-share units that are not rebuilt shall be distributed as if said units constituted a time-share property in which all time-shares had been terminated under section fifteen.

(h) The provisions of this section may be varied or waived in the case of a time-share property in which none of the time-share units may be used as dwellings or for recreational purposes.