ARTICLE 9
INSURANCE

9.1 Insurance Coverages. To the extent reasonably available, the Board shall obtain and maintain insurance coverage as set forth in this Article. If such insurance is not reasonably available, and the Board determines that any insurance described in this Article will not be maintained, the Board shall cause notice of that fact to be given to all Owners at their last known addresses. All insurance shall be obtained from an insurance carrier or carriers with an A general policyholder's rating and a Class V or better financial category by Best's Insurance Reports and with a license to do business in the State of Washington.

9.2 Property (Hazard) Insurance Coverage.

9.2.1 Coverage Required. The Association shall obtain and maintain Broad Form property insurance to cover:

9.2.1.1 All insurable Common Area structures, and such personal property of the Association as is normally insured under building coverage, but excluding any land, excavations, portions of foundations below the undersurface of the lowest basement floors, underground pilings, piers, pipes, flues and drains or other items which are normally excluded from property policies; and

9.2.1.2 All personal property owned by the Association.

9.2.1.3 The policy or policies shall provide for separate protection for each separate Common Area structure to the full insurable replacement value of that structure (limited as above provided).

9.2.2 Amounts.

9.2.2.1 The property insurance will be for an amount (after application of any deductibles in amounts determined by the Board) equal to one hundred percent (100%) of the full insurable replacement cost of the Common Area structures, including an “agreed amount” endorsement and/or an “inflation guard” endorsement, at the time the insurance is purchased and at each renewal date. Personal property owned by the Association will be insured for an amount not less than its actual replacement value.

9.2.2.2 The Board is authorized to obtain appraisals periodically for the purpose of establishing replacement cost of any Common Area structures and the actual cash value of the personal property, and the cost of such appraisals shall be a common expense.

9.2.2.3 With the exception of earthquake insurance, the maximum deductible for insurance policies shall be the lesser of Ten Thousand Dollars ($10,000) or one percent (1%) of the policy face amount. The maximum deductible for earthquake insurance policies, if any, shall be ten percent (10%) of the policy face amount.

9.2.3 Risks Insured Against. The insurance shall afford protection against Broad Form Covered Causes of Loss (fire and all other hazards that are normally covered by the standard extended coverage endorsement), and all risks of direct physical loss customarily covered for similar types of projects, including vandalism, malicious mischief, debris removal, cost of demolition, contingent liability from operation of building laws, increased cost of construction, and windstorm and water damage endorsements. In addition, the policy or policies of insurance carried by the Association may cover risks of earthquake damage.

9.3 Insurance Proceeds. Insurance proceeds from insurance obtained by the Association as provided above, for damage or destruction to any part of the Common Areas shall be paid to the Association, or to any insurance trustee designated in the policy for that purpose. The Association, acting through its Board of Directors, shall have the authority to settle and compromise any claim under insurance obtained by the Association. The insurance proceeds shall be used for the purpose of repairing, reconstructing or replacing the damaged or destroyed Common Area structure to substantially the same condition in which it existed prior to such damage or destruction; provided, however, that insurance proceeds not used for the purpose of repairing or replacing any Common Area structure in accordance with the above shall be paid to the Association. Each Owner appoints the Association, or any insurance trustee or successor trustee designated by the Association, as attorney-in-fact for the purpose of purchasing and maintaining the insurance required or permitted under this Article, including: the collection and appropriate disposition of the proceeds of any insurance policy; the negotiation of losses and execution of releases of liability; the execution of all documents; and the performance of all other acts necessary to accomplish these purposes.
In the event of any damage to or destruction of any Common Area structure, the Board shall have the authority to have performed emergency work it deems reasonably necessary to avoid further damage, destruction or diminution of value to the Common Area structure and protect the Association and Owners from liability from the condition of the site of the Common Area structure. Insurance proceeds may be used for such purpose.

9.4 Liability Insurance. General comprehensive liability insurance, including medical payments insurance, shall be maintained by the Association insuring the members of the Board and Officers (but only with respect to their duties as members of the Board and Officers), the Association, and the Owners, against any liability to the public or to the Owners, their invitees and Tenants, incident to the ownership or use of the Common Areas (including but not limited to owned and non-owned automobile liability, water damage, liability for property of others, and, if applicable, garage keeper's liability). The limits of liability under this insurance shall be in an amount determined by the Board after consultation with its insurance consultants, but not less than One Million Dollars ($1,000,000.00) combined single limit covering all claims for personal injury and/or property damage. The policy limits shall be reviewed at least annually by the Board and adjusted in the discretion of the Board. All insurance shall contain appropriate provisions or endorsements precluding the insurer from denying the claim of an Owner because of the negligent acts of the Association or another Owner.

9.5 Employee Dishonesty Insurance. Blanket employee dishonesty insurance is required for anyone who either handles or is responsible for funds held or administered by the Association, whether or not they receive compensation for their services. The policy shall name the Association as insured and shall cover the maximum funds that will be in the custody of the Association or the Manager at any time while the policy is in force. In no event shall the policy be for an amount less than the sum of three months' assessments plus reserve funds. Employee dishonesty insurance policies shall contain waivers of any defense based on the exclusion of persons who serve without compensation from any definition of “employee” or similar expression. A Manager that handles funds for the Association shall be covered by its own employee dishonesty insurance which must provide the same amount of coverage required of the Association, and which shall name the Association as an insured. The Manager may satisfy this requirement if it is named as an “employee” in the Association's employee dishonesty insurance policy. The Manager’s policy shall include a provision that requires ten (10) days' written notice to the Association before the policy can be canceled or substantially modified for any reason.

9.6 Workers' Compensation Insurance. The Board shall obtain and maintain workers' compensation insurance to meet the requirements of the laws of the State of Washington.

9.7 Directors' and Officers' Liability Insurance. The Board may obtain and maintain directors' and officers' liability insurance, if available, covering all of the directors, officers and committee members of the Association. This insurance will have limits determined by the Board.

9.8 Other Insurance. The Association may carry other insurance which the Board considers appropriate to protect the Association or the Owners; provided, that notwithstanding any other provisions in the Declaration, the Association shall continuously maintain in effect casualty, flood, liability and fidelity insurance meeting the insurance requirements for similar developments established by FNMA, FHLMC, HUD, VA, GNMA or any other governmental or quasi-governmental agency involved in the secondary mortgage market, so long as any of those agencies is a Lender, an insurer or guarantor of a Mortgage, or Owner of a Lot within the Property, except to the extent that the required coverage is not reasonably available or has been waived in writing by each involved agency.

9.9 Premiums. Insurance premiums for insurance carried or to be carried by the Association, other than that obtained by individual Owners pursuant to this Article 9, shall be a Common Expense.

9.10 Additional Insurance Provisions. The Board shall exercise its reasonable best efforts to obtain insurance policies under this Article containing the following:

9.10.1 A provision that the liability of the insurer under the policies shall not be affected by, and that the insurer shall not claim any right of setoff, counterclaim, apportionment, proration, or contribution by reason of, any other insurance obtained by or for any Owner or any Lender.

9.10.2 No provision relieving the insurer from liability for loss because of any act or neglect not within the control of the Association or because of any failure of the Association to comply with any warranty or condition regarding any portion of the premises over which the Association has no control.

9.10.3 A provision that an act or omission by an Owner, unless acting within the scope of the Owner's authority on behalf of the Association, will not void the policy or be a condition to recovery under the policy.

9.10.4 A waiver of subrogation by the insurer as to any and all claims against the Association and the Owner of any Lot in the Property, or member of the household of an Owner, and of any defenses based upon coinsurance or upon invalidity arising from the acts of the insured.

9.10.5 A provision that despite any provision giving the insurer the right to restore damage in lieu of a cash settlement, this option shall not be exercisable without the prior written approval of the Association or when in conflict with the provisions of any insurance trust agreement to which the Association is a party or with any requirement of law.

9.10.6 A provision that the insurer may not cancel or refuse to renew the policy until ten (10) days after notice of the proposed cancellation or non-renewal has been mailed to the Association.

9.10.7 A provision that if, at the time of a loss under the policy, there is other insurance in the name of an Owner covering the same risk covered by the policy, the policy of the Association provides primary insurance.

9.11 Unacceptable Insurance Policies. Insurance policies requiring or permitting (a) contributions and assessments against the Association, the Board, the Owners, the Lenders or any guarantor of the above or (b) action by the insured's board of directors, policyholders or members as a condition precedent to loss payments, or limiting clauses (other than insurance conditions) which might prevent any of the above-mentioned persons from receiving insurance proceeds shall be unacceptable to satisfy the requirements of this Article.

9.12 Owners’ Insurance.

9.12.1 All Owners shall obtain and maintain property insurance, liability insurance, and such other insurance as the Board deems advisable. All insurance shall be obtained from insurance carriers that are generally acceptable for similar residential properties and authorized to do business in the state of Washington. All such insurance policies shall provide that coverage may not be canceled or substantially modified (including cancellation for nonpayment of premium) without at least 30 days’ prior written notice to the Association. All Owners shall provide the Association with proof of insurance upon the request of the Association. The Winthrop North Village Property Owners' Association will be named as a co-insured during construction.

9.12.2 The property insurance maintained by each Owner shall, at the minimum, provide Broad form or Special form coverage in an amount equal to the full replacement cost of each Home and all fixtures and improvements located thereon, with such reasonable deductibles and exclusions from coverage as the Board may from time to time approve or by rule or regulation establish.

9.12.3 The liability insurance coverage maintained by each Owner shall cover liability of the insureds for property damage and bodily injury and death of persons arising out of the operation, maintenance, and use of the Lot and such other risks as are customarily covered for similar residential properties with a limit of liability of at least $300,000.

ARTICLE 10
MISCELLANEOUS

10.1 Severability. Invalidation of any one of these covenants or restrictions by judgment or court order shall in no way affect any other provisions which shall remain in full force and effect.

10.2 Amendment. This Declaration may be amended at any time by affirmative vote of seventy five per cent (75%) of the total voting power of the Association. No waiver, amendment, or repeal of this Declaration shall be effective until a proper instrument in writing shall be executed by the Association and recorded in the office of the Okanogan County Auditor.

10.3 Limitation of Restrictions on Declarant. Declarant is performing certain work in connection with the development of the Property and the construction of common improvements thereon. The completion of said work and the sale of the Lots is essential to the establishment of the Property as a residential community and the welfare thereof. In order that said work may be completed and said Property be established as a fully occupied residential community without undue delay, nothing in this Declaration shall be understood or construed to:

10.3.1 Prevent Declarant, or its agents or contractors or subcontractors, from doing on the Property or any Lot whatever is reasonably necessary or advisable in connection with the completion of the work; or

10.3.2 Prevent Declarant or its representatives from erecting, constructing or maintaining on any part of the Property such structures as may be reasonably necessary for the conduct of its business of completing said work and establishing said property as a residential community, and sale of the Lots; or

10.3.3 Prevent Declarant from maintaining such signs on any of the Property as may be necessary for the sale of the Lots thereof.

10.4 Notice and Mailing Addresses: All notices required or permitted hereunder shall be in writing, and shall be delivered in person or by certified mail, return receipt requested, to the address of the Member as provided by the Member and on file with the Association at the time of mailing or giving of such notice. Notice shall be deemed to be given when delivered in person or three business days after deposit in the US mail as above provided. General notices to all members need not be sent by certified mail but may be mailed by first class mail; and an affidavit of mailing by the Association Secretary or other officer or agent of the Association shall be conclusive proof of the giving of such notice. Members shall be responsible for supplying their correct mailing address and any changes thereto, to the Association, in writing in the manner provided herein for the giving of notice.

10.5 Nonwaiver of Breach. No failure of the Association, the Board or the Design Review Committee to give notice of default or to exercise any right or remedy allowed hereunder shall operate as a waiver of such, except as specifically provided in this Declaration in the event that the Association or the Committee fails to respond to certain requests. No waiver shall be effective unless it is in writing, signed by the President or Vice President of the Board on behalf of the Association, or by the Chairperson of the Design Review Committee as authorized by the Committee.

10.6 Conflict Between Documents. In the case of conflict between this Declaration and the Articles of Incorporation or By-Laws of the Association, this Declaration shall control. In the case of conflict between this Declaration and the Design Requirements and Guidelines, this Declaration shall control.