HB2251, which amends A.R.S. Section 33-1253 of the Condominium Act (it does not apply to Planned Communities) was signed by the Governor on 06/19/2023. This new law will impact insurance coverage and insurance claims in Arizona Condominiums, as follows:
- HB2251 amends A.R.S. Section 33-1253(A)(1) by clarifying that the Association is only required to provide property insurance on the units if required by the Condominium Documents. This is an important and helpful clarification to an issue that was somewhat murky under the previous statutory language. Accordingly, unless your Condominium Documents require (e.g. by use of the word “shall”) that the Association provide property insurance on the units, whether to cover the units is at the discretion of the Board. Furthermore, if the Condominium Documents require property insurance on the units, such coverage must include the units or any portion of those units provided in the Condominium Documents (e.g. walls-in), but need not include improvements and betterments installed by unit owners or the personal property of unit owners.
- HB2251 amends A.R.S. Section 33-1253 by adding subsection (A)(5), which provides that unit owners, as insured persons under the Association’s policy, have the right to report a loss under the Association’s property insurance policy. However, HB2251 also amends A.R.S. Section 33-1253 by adding subsection (E), which provides, that prior to reporting a loss under the Association’s property insurance policy, a unit owner shall report the loss to the Association and give the Association 10 business days to provide the unit owner with a written decision regarding whether the Association will be reporting a claim. If the Association opts not to report a claim, it must provide the unit owner with a written reason for its decision. As such, if your Board receives a report of loss from a unit owner, it is important to timely evaluate the loss to determine whether the loss should be submitted under the Association’s policy; and, if it should not, to provide the unit owner with a timely response, within 10 business days, detailing the reasons for the Association’s decision.
- HB2251 amends A.R.S. Section 33-1253 by adding subsection (K), which requires the Association to inform each unit owner annually in writing of both (1) the unit owner’s responsibility for the association’s insurance deductibles for all property and liability coverage; and (2) the amount of each deductible. As such, I would recommend that all Condominium Boards make a practice of sending out a community wide notification on annual basis detailing the unit owner’s responsibility, if any, for the Association’s property and liability insurance deductibles; and, the amount of each deductible.
Overall, HB2251 is a positive law for Condominiums as it provides further clarification on important issues related to property insurance coverage on the units; and, the proper protocol for a unit owner to submit (or attempt to submit) a claim under the Association’s policy. Please contact Mulcahy Law Firm, P.C. for assistance regarding any insurance related issues.
