[HISTORY: Adopted by the Borough Council
of the Borough of Old Forge as indicated in article histories. Amendments
noted where applicable.]
[Adopted 4-18-1995 by Ord. No. 1995-4]
This article may be known and cited as the "Fire
Insurance Escrow Ordinance."
The Borough Manager or his designee is hereby
appointed as the designated officer who is authorized to carry out
all responsibilities and duties stated herein.
No insurance company, association or exchange
(hereinafter the "insuring agency") doing business in the Commonwealth
of Pennsylvania shall pay a claim of a named insured for fire damage
to a structure located within the Borough of Old Forge (hereinafter
the "municipality") where the amount recoverable for the fire loss
to the structure under all policies exceeds $7,500, unless the named
insured or insuring agent is furnished by the Municipal Treasurer
with a municipal certificate pursuant to Section 508(b) of Act 98
of 1992, and unless there is compliance with Section 508(c) and (d)
of Act 98 of 1992[2] and the provisions of this article.
A.
Where, pursuant to Section 508(b)(1)(ii) of Act 98
of 1992,[1] the Financial Officer issues a certificate and bill for
delinquent taxes, assessments, penalties and user charges against
the property and also the total costs, if any, incurred by the Borough
for the removal, repair or securing of a building or other structure
on the property, the insuring agent shall transfer to the Financial
Officer an amount from the insurance proceeds necessary to pay taxes,
assessments, penalties, charges and costs as shown on the bill, which
amount shall be applied or credited by the Borough to payment of the
items shown on the bill.
[1]
Editor's Note: See 40 P.S. § 638(b)(1)(ii).
B.
Where, pursuant to Section 508(b)(1)(i) of Act 98
of 1992,[2] the Financial Officer issues a certificate indicating
that there are no delinquent taxes, assessments, penalties or user
charges against real property, the insuring agent shall pay the claim
of the named insured; provided, however, that if the loss as agreed
upon by the named insured and the insuring agent equals or exceeds
60% of the aggregate limits of liability on all fire polices covering
the building or structure, the following procedures must be followed:
(1)
Amount to be transferred.[3]
(a)
The insuring agent shall transfer from the insurance
proceeds to the designated officer of the Borough in the aggregate
of $2,000 for each $15,000, and each fraction of that amount, of a
claim; or
(b)
If, at the time of a loss report agreed to between
the named insured and the insuring agent, the named insured has submitted
a contractor's signed estimate of the costs of removing, repairing
or securing the building or other structure, in an amount less than
the amount calculated under the foregoing transfer formula, the insuring
agent shall transfer to the Borough from the insurance proceeds the
amount specified in the estimate.
(2)
The transfer of proceeds shall be on a pro-rata basis
by all companies, associations or exchanges insuring the building
or other structure.
(3)
After the transfer, the named insured may submit a
contractor's signed estimate of the costs of removing, repairing or
securing the building or other structure, and the designated officer
shall return the amount of the funds transferred to the Borough in
excess of the estimate to the named insured, if the Borough has not
commenced to remove, repair or secure the building or other structure.
(4)
Upon receipt of proceeds under this subsection, the
municipality shall do the following:
(a)
The designated officer shall place the proceeds
in the separate fund to be used solely as security against the total
costs of removing, repairing or securing the building or structure
which are currently incurred by the municipality. Such costs shall
include, without limitation, any engineering, legal or administrative
costs incurred by the municipality in connection with such removal,
repair or securing of the building or any proceedings related thereto.
(b)
It is the obligation of the insuring agent,
when transferring the proceeds, to provide the municipality with the
name and address of the named insured. Upon receipt of the transferred
funds and the name and address of the named insured, the designated
officer shall contact the named insured, certify that the proceeds
have been received by the municipality and notify the named insured
that the procedures under this subsection shall be followed.
(c)
When repairs, removal or securing of the building
or other structure has been completed in accordance with all applicable
regulations and orders of the municipality and the required proof
of such completion received by the designated officer, and if the
municipality has not incurred any costs for repairs, removal or securing,
the funds shall be returned to the named insured. If the municipality
has incurred costs for repairs, removal or securing of the building
or other structure, the costs shall be paid from the fund, and, if
excess funds remain, the municipality shall transfer the remaining
funds to the named insured.
(d)
To the extent that interest is earned on proceeds
held by the municipality pursuant to this subsection and not returned
to the named insured, such interest shall belong to the municipality.
To the extent that proceeds are returned to the named insured, interest
earned on such proceeds shall be distributed to the named insured
at the time that the proceeds are returned.
[2]
Editor's Note: See 40 P.S. § 638(b)(1)(i).
C.
Nothing in this section shall be construed to limit
the ability of the municipality to recover any deficiency. Furthermore,
nothing in this section shall be construed to prohibit the municipality
and the named insured from entering into an agreement that permits
the transfer of funds to the named insured if some other reasonable
disposition of the damaged property has been negotiated.
The Borough of Old Forge may, by resolution,
adopt procedures and regulations to implement Act 98 of 1992[1] and this article and may, by resolution, fix reasonable
fees to be charged for municipal activities or services provided pursuant
to Act 98 of 1992 and this article, including but not limited to issuance
of certificates and bills, performance of inspections and opening
separate fund accounts.
[1]
Editor's Note: See 40 P.S. § 638.
Any owner of property, any named insured or
any insuring agency who or which violates this article shall be subject
to a penalty of up to $1,000 per violation, plus costs of prosecution,
and, in default of payment of such fine and costs, to imprisonment
for not more than 30 days.
