ARTICLE Vlll
INSURANCE

1. Hazard Insurance. The Board of Directors shall obtain and maintain hazard insurance from a reputable and financially sound insurance carrier to protect the commonly owned property of the Association. Such insurance shall provide coverage equal to or exceeding the full replacement cost of the Association’s Common Areas, excluding land, foundations, and similar items typically excluded from coverage. Coverage shall extend to the exterior of all Townhouse buildings (from the sheathing out), including roofs, surfaces, and structures. The insurance shall be sufficient to fully reconstruct the insured property in the event of loss.
   
   The Association shall be named as the insured on the policy, for the benefit of all Owners. The policy shall include, but not be limited to, coverage for loss or damage caused by fire, extended coverage perils, vandalism, malicious mischief, and windstorm.
   
   The Board may also elect to purchase additional coverages deemed necessary or advisable. The policy should include an Agreed Amount Endorsement, Inflation Guard Endorsement, or equivalent coverage, if available.


2. Liability Insurance. The Board shall procure and maintain from a financially sound insurance carrier a policy or policies of public liability insurance to insure the Association, the Board, the Managing Agent and employees of the Association and the Owners against claims for bodily injury and property damage arising out of the conditions of the Common Areas, or activities thereon, under a comprehensive general liability form. Such insurance shall be for such limits as the Board may decide, but not less than those limits customarily carried in connection with properties of comparable character and usage in Madison County, Idaho, not less than $1,000,000 for personal injury and property damage arising out of a single occurrence, such coverage to include protection against water damage liability, liability for non-owned and hired automobile, liability for the property of others, and such other risks as shall customarily be covered with respect to property similar in construction, location and use. The policy shall contain a "Severability of Interest" endorsement which shall preclude the insurer from denying the claim of any Owner because of negligent acts of the Association or other Owners, and a cross-liability endorsement pursuant to which the rights of the named insured as between themselves are not prejudiced, The policy shall provide that the policy may not be canceled or substantially modified by the insurer unless it gives at least 30 days' prior written notice thereof to each insured. Any such coverage procured by the Board shall be without prejudice to the right of the Owners to insure their personal liability for their own benefit at their own expense.


3. Additional Insurance and Further General Requirements. The Board may also procure insurance which shall insure the Common Areas and the Association or the Owners and others against such additional risks as the Board may deem advisable. Insurance procured and maintained by the Board shall not require contribution from insurance held by any of the Owners or their Mortgages. Each policy of insurance obtained by the Board shall, if reasonably possible provide:
   1. a waiver of the insurer's right of subrogation against the Association, the Owners, and their respective directors, officers, agents, employees, invitees and tenants;
   2. that it cannot be canceled, suspended, or invalidated due to the conduct of any particular Owner or Owners;
   3. that it cannot be canceled, suspended or invalidated due to the conduct of the Association without a prior written demand that the defect be cured; and
   4. that any "no other insurance" clause therein shall not apply with respect to insurance maintained individually by any of the Owners.


4. Fidelity Coverage. The Association may elect to maintain fidelity coverage to protect against dishonest acts on the part of officers, trustees, managing agents, directors and employees of the Association and all others (including volunteers) who handle, or are responsible for handling, funds of the Association. In that event, such fidelity bonds shall:
   • name the Association as an obligee;
   • be written in an amount based upon the best business judgment of the Association and shall not be less than the estimated maximum of funds (including reserve funds) in the custody of the Association or the Managing Agent at any given time during the term of each bond, but in no event be less than a sum equal to three months' assessment on all Units plus reserve funds;
   • contain waivers of any defense based upon the exclusion of volunteers or persons who serve without compensation from any definition of "employee" or similar expression; and
   • provide that they may not be canceled or substantially modified (including cancellation for nonpayment of premium) without at least 30 days' prior written notice to the insured.


5. Review of lnsurance. The Board shall periodically, and whenever a group of Owners entitled to exercise at least twenty percent (20%) of the outstanding votes in the Association request, review the adequacy of the Association's insurance program and shall report in writing the conclusions and action taken on such review to the Owner of each Unit and to the holder of any Mortgage on any Lot or Unit who shall have requested a copy of such report. Copies of every policy of insurance procured by the Board shall be available for inspection by any Owner and any Mortgage.


6. Other Insurance Provisions. All insurance required pursuant to this ARTICLE VIII shall be written by insurers licensed in the State of Idaho. Notwithstanding anything in this ARTICLE VIII to the contrary, any insurance required to be obtained by the Association pursuant to Sections 2, 3, or 4 of this ARTICLE VIII, shall be required only to the extent that such coverage is reasonably obtainable at reasonable rates and is customarily obtained with respect to improvements or facilities having the same or similar characteristics of the Common Areas and Units or risks being insured.

ARTICLE IV
DUTIES AND OBLIGATIONS OF OWNERS

2. Insurance. Notwithstanding any hazard insurance coverage purchased by the Association pursuant to the terms of these Covenants, Conditions, and Restrictions (the “CC&Rs”), each Unit Owner shall procure and maintain, at their own expense, a hazard insurance policy covering their Unit, including interior improvements and personal property, as well as liability coverage for the Unit and common areas. Such insurance shall provide coverage for damage to the Unit’s interior, including but not limited to studs, insulation, drywall and fixtures (from the studs and fixtures in) and as described in ARTICLE I under “Unit”. This insurance is commonly referred to as condominium insurance.