ARTICLE XVI
INSURANCE
16.1 Types of Insurance. The Association shall obtain and keep in full force and effect at all times the following types of insurance coverage, provided by companies licensed to do business in the State of Utah.
(a) Public Liability Insurance. The Association shall obtain and maintain a comprehensive policy of public liability insurance converging all the Common Areas and Facilities, if applicable, commercial spaces and public way (if any) for Bailey Acres, with a Severability of Interest Endorsement of equivalent coverage which would preclude the insurer from denying the claim of a Lot owner because of the negligent acts of the Association or another Lot Owner, with limits not less than $1,000,000.00 covering all claims for personal injury and/or property damage arising out of a single occurrence including protection against water damage liability, liability for non-owned and hired automobiles, liability for property of others, and such other risks as are customarily covered in similar projects. The scope of coverage also includes all other coverage in the kinds and amounts required by private institutional mortgage investors for projects similar in construction, location and use.
(b) Workman’s compensation Insurance. The Association shall obtain and maintain workmen’s compensation and employers liability insurance if applicable and all other similar insurance with respect to employees of the Association in the amounts in the forms now or hereafter required by law.
(c) Fidelity Insurance or Bond. The Association shall obtain and maintain adequate fidelity coverage to protect against dishonest acts by its officers, Members of the Board of Trustees, and employees and all others who are responsible for handling funds of the Association. Such fidelity bonds shall meet the following requirements;
a. all shall name the Association as an obligee;
b. all shall be written in an amount equal to at least 100% of the estimated annual operating expenses and reserves of the Association, (Exceptions to this requirement will be considered on a case by case basis);
c. all shall contain waivers of any defense based upon the exclusion of persons who serve without compensation from any definition of ‘employee’ or similar expression or shall contain an appropriate endorsement to the policy to cover any persons who serve without compensation if the policy would not otherwise cover volunteers;
(d) Other Insurance. Notwithstanding any other provisions contained herein to the contrary, the Association shall continuously maintain in effect such casualty, flood and liability insurance and a fidelity bond meeting the insurance and fidelity bond requirement for development projects established by the Federal National Mortgage Association and the Government National Mortgage Association, so long as either is a mortgagee or Owner of a Lot, except to the extent such coverage is not available or has been waived by the Federal National Mortgage Association or the Government National Mortgage Association.
16.2 Additional Coverage. The Provisions of this Declaration shall not be construed to limit the power or authority of the Association to obtain and maintain insurance coverage in addition to any insurance coverage required by this Declaration, in such amounts and in such forms as the Association may deem appropriate from time to time.
16.3 Governmental Requirements. Notwithstanding any other provision herein, the Association shall continuously maintain in effect such bonds and other insurance meeting the requirement for similar subdivisions established by the Federal Home Loan Mortgage Corporation (FHLMC), the Government National Mortgage Association, (GNMA), The Federal National Mortgage Association (FNMA), Housing and Urban Development (HUD), Federal Housing Administration (FHA), Veterans Administration, (VA), State of Utah Finance Agency and conventional lending Institutions, so long as there are any mortgages on any of the Properties.