AgdaPkt 2014-06-23 Closed and Joint SA

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7.1.L. - Page 91 8.3.5 Endorsements. The policy shall contain such endorsements as the Board in its discretion shall elect after consultation with a competent property insurance consultant. 8.3.6 Waiver of Subrogation. The Association waives all subrogation rights against any Owner or Occupant except to the extent of any deductible. The policy shall include an acknowledgment of the Association's right to waive all subrogation rights against the Owner. 8.3.7 Deductible. Except as otherwise provided by the Board in writing,when a claim is made on the Association's property insurance policy,an Owner is responsible for payment of the deductible in circumstances: (i) where damage is caused by the fault of the Owner or the Owner's Occupants or their Permittees; and/or (ii) where damage is caused primarily by the failure of an Improvement within the Unit which the Owner is responsible for maintaining. If neither of the foregoing applies as determined by the Board, the Association shall pay the deductible. The Association may levy a reimbursement assessment against an Owner's Condominium as authorized under Section 6.5 to collect the deductible from the Owner as authorized herein. 8.4 Insurance Rating and Cancellation. The insurance company providing the Association's insurance under Sections 8.1 and 8.2 shall have a A.M. Best rating of not less than A:VII if licensed to do business in the State of California and a rating of not less than A:X if not licensed to do business in the State of California,provided that if the Board determines that insurance from insurance companies with the required ratings is not available at commercially reasonable rates,the Board may reduce the rating requirements after consultation with a qualified insurance consultant. If the A.M. Best ratings are no longer available, the insurance ratings shall be based on equivalent ratings issued by an independent insurer company rating entity used by financial institutions for insurance rating purposes. All of the policies of insurance maintained by the Association shall contain a provision that such policy or policies shall not be cancelled or terminated,or expired by their terms,or not renewed without 30 days'prior written notice to the Board,the Owners and their respective first Mortgagees (provided that such Owners or Mortgagees have filed written requests with the carrier for such notice)and every other Person in interest who shall have requested such notice of the insurer. 8.5 Board's Authority to Revise Insurance Coverage. Subject to the provisions of Section 8.6, the Board shall have the power and right to deviate from the insurance requirements contained in this Article 8 in any manner that the Board, in its discretion, considers to be in the best interests of the Association, provided that the Board shall maintain the minimum insurance requirements set forth in Civil Code sections 5800 and 5805 or in any successor statute thereto. If the Board elects to materially reduce the coverage from the coverage required in this Article 8, the Board shall make all reasonable efforts to notify the Members of the reduction in coverage and the reasons therefor at least 30 days prior to the effective date of the reduction. The Board is authorized to negotiate and agree on the value and extent of any loss under any policy carried by the Association, including, but not limited to, the right and authority to compromise and settle any claim or enforce any claim by legal action or otherwise and to execute releases in favor of any insurer. Each Owner,by acceptance of a deed to a Condominium,irrevocably appoints the Association or the Insurance Trustee, described in Section 8.7, as that Owner's attorney-in-fact for purposes of procuring, negotiating, accepting, compromising, releasing, settling, distributing and taking other related actions in connection with any insurance policy maintained by the Association and any losses or claims related thereto and agrees to be bound by the actions so taken as if the Owner had personally taken the action. 8.6 Periodic Insurance Review. The Board periodically(and not less than once every three(3) years)shall review the Association's insurance policies and make such adjustments to the policies'terms and conditions as the Board considers to be in the best interests of the Association. If applicable,the review shall include an appraisal by a qualified appraiser of the current replacement costs of all covered property under the Association's property insurance policy unless the Board is satisfied that the current dollar limit of the property insurance policy,coupled with the amount of actual reserves on hand, is equal to or greater than the current replacement costs. CLSS\51643\927586.5 37 June 16,2014