Kentucky law requires that unit owners of a condominium form an association once the first unit is sold. The association must consist exclusively of all the unit owners of the condominium.
Kentucky law also requires that the association maintain a master insurance policy. Kentucky statute 381.9187 states:
(1) Commencing not later than the time of the first conveyance of a unit to a person other than a declarant, the association shall maintain, to the extent reasonably available:
a. Property insurance on the common elements insuring against fire and extended coverage perils and such other risks as may be determined by the association. The total amount of insurance after application of any deductibles shall be not less than one hundred percent (100%) of the actual cash value of the insured property at the time the insurance is purchased and at each renewal date, exclusive of land, excavations, and other items normally excluded from property policies; and
b. Liability insurance, including medical payments insurance, in an amount determined by the executive board but not less than any amount specified in the declaration, covering all occurrences commonly insured against for death, bodily injury, and property damage arising out of or in connection with the use, ownership, or maintenance of the common elements.
The statute further states:
(3). Insurance policies carried pursuant to subsection (1) of this section shall provide that:
a. Each unit owner is an insured person under the policy with respect to liability arising out of his or her interest in the common elements or membership in the association;
b. The insurer waives its right to subrogation under the policy against any unit owner or member of his or her household
c. No act or omission by any unit owner, unless acting within the scope of his or her authority on behalf of the association, will void the policy or be a condition to recovery under the policy; and
d. If, at the time of a loss under the policy, there is other insurance in the name of a unit owner covering the same risk covered by the policy, the association’s policy provides primary insurance.
Individual unit owners may obtain their own insurance policies. However, unlike the statute relating to condominium associations, there is no requirement for unit owners to obtain insurance.