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<br />endorsements, coverage and limits with respect to such hazards <br />as may be required by the regulations of the FHA or FNMA as <br />a precondition to their insuring, purchasing or financing a <br />mortgage on a Lot. <br /> <br />c. Fidelity bond or insurance coverage against dishonest acts on the <br />part of directors, officers, managers, trustees, employees or <br />persons responsible for handling funds belonging to or <br />administered by the Association if deemed to be advisable by the <br />Board or required by the regulations of the FHA or FNMA as a <br />precondition to the purchase or financing of a mortgage on a Lot. <br />The fidelity bond or insurance shall name the Association as the <br />named insured and shall, if required by the regulations of the <br />FHA or FNMA as a precondition to their insuring, purchasing or <br />financing of a mortgage on a Lot, be written in an amount equal to the greater <br />of (i) the estimated maximum of Association funds, including reserves, in the <br />custody of the Association or management agent at any given time while the <br />bond is in force, or (ii) a sum equal to three months aggregate assessments on <br />all Lots plus reserves. An appropriate endorsement to the policy to cover any <br />persons who serve without compensation shall be added if the policy would not <br />otherwise cover volunteers, or a waiver of defense based upon the exclusion of <br />persons serving without compensation shall be added. <br /> <br />d. Workers' Compensation insurance as required by law. <br /> <br />e. Directors and officers liability insurance with such reasonable <br />limits and coverage as the Board shall determine from time to <br />time. <br /> <br />f. Such other insurance as the Board may determine from time to <br />time to be in the best interests of the Association and the Owners. <br /> <br />Section 2. Premiums: Improvements: Deductibles. All insurance premiums <br />shall be assessed and paid pursuant to Section 6 of Article V of this Declaration. The <br />insurance need not cover improvements and betterments to the Lots installed by Owners, but <br />if improvements and betterments are covered, any increased cost may be assessed against the <br />Lots affected. The Association may, in the case of a claim for damage to a Lot, (i) pay the <br />deductible amount as a Common Expense, (ii) assess the deductible amount against the Lots <br />affected in any reasonable manner, or (iii) require the Owners of the Lots affected to pay the <br />deductible amount directly. <br /> <br />Section 3. Loss Payee: Insurance Trustee. All insurance coverage <br />maintained by the Association shall be written in the name of, and the proceeds thereof shall <br />be payable to, the Association (or a qualified insurance trustee selected by it) as trustee for <br />the benefit of the Owners and secured parties, including Eligible Mortgagees, which suffer <br />loss. The Association, or any insurance trustee selected by it, shall have exclusive authority <br />to negotiate, settle and collect upon any claims or losses under any insurance policy <br />maintained by the Association. <br /> <br />Section 4. Waivers of Subro2ation. All policies of insurance shall contain <br />waivers of subrogation by the insurer against the Association, or an Owner, members of the <br />Owner's household, officers or directors, as applicable, and, if available, waivers of any <br />defense based on co-insurance or of invalidity from any acts of the insured. <br /> <br />13 <br />