[HISTORY: Adopted by the Borough Council of the Borough of Palmerton as indicated in article histories. Amendments noted where applicable.]
[Adopted 4-14-1993 by Ord. No. 515]
This article may be known and cited as the "Fire Insurance Escrow Ordinance."
The Commonwealth of Pennsylvania has enacted Act 98 of 1992, effective September 7, 1992, amending the Insurance Company Law of 1921,[1] to provide procedures for the payment of certain fire loss claims. The Council of the Borough of Palmerton finds it necessary and advisable, and declares the purpose of this article, to deter the commission of arson and related crimes, to discourage the abandonment of property, to prevent urban blight and deterioration and to provide for the collection of delinquent municipal taxes, assessments, penalties and user charges against real estate by adopting this article pursuant to Section 508 of the Insurance Law of 1921 to provide for the payment of proceeds from certain fire loss claims to the Borough.
[1]
Editor's Note: See 40 P.S. § 638.
The Borough Manager or the Borough Manager's designee is hereby appointed as the designated officer who is authorized to carry out all responsibilities and duties stated herein.
[Amended at time of adoption of Code (see Ch. 1, General Provisions, Art. I)]
No insurance company, association or exchange (hereinafter the "insuring agent") 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 Palmerton (hereinafter the "Borough") 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 Financial Officer with a municipal certificate pursuant to Section 508(b) of Act 98 of 1992[1] and unless there is compliance with Section 508(c) and (d) of Act 98 of 1992[2] and the provisions of this article.
[1]
Editor's Note: See 40 P.S. § 638(b).
[2]
Editor's Note: See 40 P.S. § 638(c) and (d).
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 Borough Treasurer an amount from the insurance proceeds necessary to pay the 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 policies covering the building or structure, the following procedures must be followed:
(1) 
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
[Amended at time of adoption of Code (see Ch. 1, General Provisions, Art. I)]
(2) 
If at the time of a proof of loss 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, the insuring agent shall transfer to the Borough from the insurance proceeds the amount specified in the estimate.
[2]
Editor's Note: See 40 P.S. § 638(b)(1)(i).
C. 
The transfer of proceeds shall be on a pro rata basis by all companies, associations or exchanges insuring the building or other structure.
D. 
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 removed, repair or secure the building or other structure.
Upon receipt of proceeds under this article, the Borough 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 incurred by the Borough. 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 Borough 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 Borough and notify the named insured that the procedures under this subsection shall be followed; and
C. 
When repairs, removal or securing of the building or other structure have been completed in accordance with all applicable regulations and orders of the Borough and the required proof of such completion received by the designated officer, and if the Borough has not incurred any costs for repairs, removal or securing, the fund shall be returned to the named insured. If the Borough 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 Borough shall transfer the remaining funds to the named insured.
To the extent that interest is earned on proceeds held by the Borough pursuant to this article and not returned to the named insured, such interest shall belong to the Borough. 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.
Nothing in this article shall be construed to limit the ability of the Borough to recover any deficiency. Furthermore, nothing in this section shall be construed to prohibit the Borough and the named insured from entering into an agreement that permits the transfer of funds to the named insured or some other reasonable disposition of the damaged property has been negotiated.
The Borough Council may by resolution adopt further procedures and regulations to implement Act 98 of 1992[1] and this article and may by ordinance 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.
[Amended at time of adoption of Code (see Ch. 1, General Provisions, Art. I)]
Any owner of property and named insured or any insuring agent who violates this article shall be subject to a penalty as prescribed by Chapter 1, General Provisions, Article II, § 1-17A, of the Code of the Borough of Palmerton.