Like It or Not, WUCOIA is Coming…(Part 1 – Insurance)
On January 1, 2028, RCW 64.90, known as the as the Washington Uniform Common Interest Ownership Act or more commonly, “WUCIOA”, will apply to all common interest communities, with a handful of exceptions. In other words, it will apply to most condominium and homeowners’ associations and will effectively repeal the prior statutory schemes: the Homeowners’ Association Act (RCW 64.38), the Horizontal Property Regimes Act (RCW 64.32), and the Condominium Act (RCW 64.34). I have gone into some detail about the adoption of WUCOIA in a past blog post here.
This is the first post of a blog series that will cover some of the major changes that WUCOIA brings to community associations in Washington State – today’s topic: insurance requirements. WUCOIA will, among other things, bring sweeping changes to the types of insurance policies that community associations may obtain. Some of the significant changes include the following:
- All community associations will now have to obtain “walls-in” coverage, wherein the association maintain property insurance that covers the common elements as well as the units (including owner upgrades except as otherwise prohibited by the declaration), at a minimum of 80% of actual cash value.
- All community associations will have to obtain commercial general liability insurance to deal with certain types of loss in the Common Areas.
- All community associations must secure fidelity insurance to cover theft, misappropriation of funds, or other dishonest or fraudulent conduct. WUCOIA does not set a minimum dollar figure for this insurance.
- All community associations must provide owners with notice and an opportunity to be heard prior to assessing costs relating to the owner’s negligence or misconduct, where it applies to allocation of payment of the master policy’s insurance deductible to that owner.
- RCW 64.90.470 further requires that under ever policy: (1) each owner be an insured for purposes of Common Area liability; (2) that the association’s policy serve the primary insurance, with the individual owner’s insurance serving as secondary; and (3) that the insurer waive subrogation.
These constitute large adjustments to the current requirements for some community associations. For example, condominiums formed prior to July 1, 1990, governed by RCW 64.32 have no insurance requirements apart from those required by the governing documents, a majority of owners, or a mortgagee. Condominiums formed under RCW 64.34, on or after July 1, 1990, but before July 1, 2018, do not need fidelity insurance. Meanwhile, homeowners’ associations formed under RCW 64.38 have no insurance requirements whatsoever.
While WUCOIA has not yet supplanted the previous statutes governing community associations, that day is coming soon. Updating your CC&Rs may be of vital importance to avoid significant confusion regarding your rights and responsibilities. If you have questions about your CC&Rs, WUCOIA, or any other matters that have to do with community association issues and laws, please feel free to reach out to the lawyers at Beresford Booth for assistance at info@beresfordlaw.com or by phone at (425) 776-4100. We remain prepared and available to assist you.