7.3 Insurance to be Maintained by Owners

All policies shall contain waivers of any defense based on invalidity arising from any acts or neglect of an Owner where the Owner is not under the control of the Association. All policies must provide that no assessment may be made against a First Mortgagee, its successors or assigns and that any assessment made against others shall not become a lien on a Unit superior to the lien of a First Mortgagee.

All policies of insurance shall be written by reputable companies duly authorized and licensed to do business in the State of Colorado with an A.M. Best’s rating of “B+” or better if reasonably available, or, if not reasonably available, the most nearly equivalent rating.

All insurance policies shall contain a standard mortgagee clause or equivalent endorsement (without contribution) naming the First Mortgagee(s) and their successors and assigns as additional insureds in the policy (but only to the extent a First Mortgagee has a Security Interest in any of the Common Elements insured by the Association).

All policies shall not be canceled, invalidated, or suspended due to the conduct of any Owner, their Guests or any Member, officer or employee of the Board of Directors or the Managing Agent without a prior demand in writing that the Board or the Managing Agent to abate or cure the conduct complained of and the conduct shall not have abated or been cured within forty-five (45) days after the demand is issued.

The policies shall also provide that any “no other insurance” clause expressly excludes individual Owners’ policies from its operation so that the property insurance policy purchased by the Board of Directors shall be deemed primary coverage and any individual Owners’ policies shall be deemed excess coverage, and in no event shall the insurance coverage obtained and maintained by the Board of Directors provide for or be brought into contribution with insurance purchased by individual Owners or their First Mortgagees, unless otherwise required by law.

The insurance described in Paragraphs 7.1 and 7.2 shall be carried naming the Association as the owner and beneficiary thereof for the use and benefit of the Association and provide that all claims are to be settled on a replacement cost basis.

The deductible, if any, on an insurance policy shall be as the Directors determine to be consistent with good business practice and which shall be consistent with the requirements of the First Mortgagees. Any loss falling within the deductible portion of a policy shall be paid by the Association. Funds to cover the deductible amounts should be included in the Association’s Reserve Funds and be so designated.

The Board shall have the authority to levy, after Notice and Hearing, against Owners causing a loss to the Association for the reimbursement of all deductibles paid by the Association as an Individual Assessment in accordance with Paragraph 5.4(b) of this Declaration.

7.3 Insurance to be Maintained by Owners. EACH OWNER SHALL PURCHASE AND MAINTAIN IN EFFECT A UNIT OWNER’S POLICY (HO-6 OR ITS EQUIVALENT) FOR ALL OF THE OWNER’S PERSONAL PROPERTY, FURNITURE, FURNISHINGS, EQUIPMENT, AND RELATED ITEMS, LOCATED WITHIN THE OWNER’S UNIT. THE POLICY SHALL ALSO INSURE ANY AND ALL IMPROVEMENTS MADE TO THE UNIT’S INTERIOR FINISHED SURFACES OF ITS PERIMETER WALLS, FLOORS AND CEILINGS 37