(a) Insurance for all insurable improvements in the common property against loss or damage by fire or other hazards, including extended coverage, vandalism and malicious mischief. The insurance shall cover the full replacement costs of any repair or reconstruction in the event of damage or destruction from any such hazard if the insurance is available at reasonable cost; and

(b) A public liability policy covering all common property and all damage or injury caused by the negligence of the association.

(2) Premiums for insurance obtained under this section shall be a common expense of the association.

(3) A policy may contain a deductible in the amount specified in the declaration or bylaws. The deductible amount shall be added to the face amount of the policy in determining whether the insurance equals at least the full replacement cost.

(4) Notwithstanding a provision in the declaration or bylaws that imposes a maximum deductible amount in an association insurance policy, if the board of directors determines that it is in the best interest of the association and owners as provided in subsection (5) of this section, the board may adopt a resolution authorizing the association to obtain and maintain an insurance policy with a deductible amount exceeding the specified maximum, but not in excess of the greater of:

(a) The maximum deductible acceptable to the Federal National Mortgage Association; or

(b) $10,000.

(5) In making the determination under subsection (4) of this section, the board of directors shall consider such factors as the availability and cost of insurance and the loss experience of the association.

(6) Not later than 10 days after adoption of a resolution under subsection (4) of this section, the board of directors shall ensure that a copy of the resolution and a notice described in ORS 94.676 are:

(a) Delivered to each owner; or

(b) Mailed to the mailing address of each owner or to the mailing address designated in writing by the owner.

(7)(a) The homeowners association of a Class I or Class II planned community created under ORS 94.550 to 94.783 or a planned community described in ORS 94.572 shall maintain fidelity bond coverage for:

(A) All persons with access to association funds, including directors, officers, employees, managing agents and employees of a management company or other entity with which the association contracts.

(B) Computer fraud and funds transfer fraud.

(b) The fidelity bond required under paragraph (a) of this subsection must be in an amount that is at least equal to the combined amount of:

(A) Funds maintained in the name of the association in accounts under ORS 94.670; and

(B) Any obligations issued by the United States government purchased by the association under ORS 94.670.

(8) Subsection (7) of this section applies to a Class I or Class II planned community under ORS 94.550 to 94.783, or a planned community described in ORS 94.572, created before, on or after January 1, 2020.

(9) Following the turnover meeting described in ORS 94.616, on an annual basis, with the approval of owners representing a majority of the votes present at a meeting, the board of directors may elect for the following year to not maintain the fidelity bond coverage required under subsection (7)(a) of this section or to maintain fidelity bond coverage in an amount less than that required under subsection (7)(b) of this section for the following year. [1981 c.782 §51; 2007 c.409 §14; 2019 c.66 §1]