SECTION 9: Insurer’s Responsibility In certain situations as required by HUD, VA, or other laws or regulations, this Limited Warranty is backed by an insurance policy, as further described in the HUD Addendum. In those situations, in the event the Builder is unable to meet its obligations under this Limited Warranty and a Limited Warranty claim must be resolved by the Insurer, the following conditions shall apply: 9.1 The decision of whether to repair or replace a defective item, or pay the Homeowner the reasonable cost of doing so, is the Insurer’s.
9.5 The Insurer’s Warranty coverage is in excess of coverage provided under other warranties or insurance, whether collectible or not 9.6 Any claim involving a common element in a condominium must be made by an authorized representative of the condominium association. 9.7 If the Insurer decides to pay the reasonable costs of repairing a claim, the payment shall be made to, or on behalf of, the Homeowner and any mortgagee or their successors, as each interest may appear, provided the Insurer shall not have any obligation to make payment jointly to the Homeowner and mortgagee where the mortgagee has not notified the Insurer in writing of its security interest in the home prior to such payment. Any mortgagee shall be completely bound by any conciliation or arbitration relating to a claim between the Homeowner and the Insurer. † 9.8 Any dispute between the Homeowner and the Insurer related to, or arising from, this Limited Warranty will be resolved by binding arbitration. † Any such binding arbitration will be initiated by contacting the Plan Administrator to obtain a Binding Arbitration Request Form. The process for such arbitration will be conducted in the same manner as outlined in Section 7 of this Limited Warranty.
9.2 The total liability of the Insurer under this Limited Warranty is limited to, and shall not
exceed, the lesser of the following: (A) The contract price of the home;
(B) The reasonable cost of that part of the home damaged for like construction and use on the same premises; (C) The necessary amount to repair or replace the portion of the building damaged by a Structural Element defect, less all amounts paid by, or on behalf of, the Builder or the Insurer under this Limited Warranty.
9.3 Actions taken to cure defects will not extend the period of coverage specified in this Limited Warranty.
9.4 When the Insurer finishes repairing or replacing, or pays the Homeowner the actual cost for repairing or replacing a claim under this Limited Warranty, the Homeowner must execute a full and unconditional release of all Insurers’ obligations with respect to the claim. The Insurer shall be subrogated to all the Homeowner’s rights including, but not limited to, assignment of the proceeds of any other insurance or warranties to the Insurer. The Homeowner shall do nothing to prejudice such rights of subrogation.
† See the HUD Addendum for modifications to this section.
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