This chapter is enacted pursuant to Act No. 1992-98, House Bill No. 1028, and is intended to establish procedures for
the escrowing of fire insurance proceeds.
No insurance company, association or exchange doing business in this
commonwealth shall pay a claim of a named insured for fire damage to a structure
located within the Borough where the amount recoverable for the fire loss
to the structure under all policies exceeds $5,000 unless there is compliance
with the procedures set forth in this chapter.
When the loss agreed to between the named insured and the company, association
or exchange equals or exceeds 60% of the aggregate limits of liability on
all fire policies covering the building or other structure, the insurance
company, association or exchange shall transfer from the insurance proceeds
to the Borough Code Enforcement Officer $2,000 for each $15,000 and each fraction
of that amount of a claim. However, if at the time of a proof of loss agreed
to between the named insured and the insurance company, association or exchange,
the named insured has submitted a contractor's signed estimate of the
costs of removing, repairing or securing the building or other structure,
the insurance company, association or exchange shall transfer from the insurance
proceeds the amount specified in the estimate. The transfer of proceeds shall
be on a pro rata basis by all companies, associations or exchanges insuring
the building or other structure. Policy proceeds remaining after the transfer
to the Borough shall be disbursed in accordance with the policy terms. The
named insured may submit a contractor's signed estimate of the costs
of removing, repairing or securing the building or other structure after the
transfer, and the Code Enforcement Officer shall return the amount of the
fund 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.
Upon receipt of the proceeds by the Borough, the Code Enforcement Officer and/or the Borough Secretary shall place the proceeds in a separate fund to be used solely as security against the total costs of removing, repairing or securing incurred by the Borough. When transferring the funds as required in §
49-3, an insurance company, association or exchange shall provide the Borough with the name and address of the named insured, whereupon the Borough 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 chapter shall be followed. The fund shall be returned to the named insured when repairs, removal or securing of the building or other structure have been completed and the required proof received by the Code Enforcement Officer if the Borough has not incurred any costs for repairs, removal or securing. In the event 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.
Any person violating any of the provisions of this chapter shall be
guilty of the offense charged and, upon conviction thereof in summary proceedings,
shall be sentenced to pay the costs of prosecution and a fine of not more
than $1,000 to the use of the Borough and, in default of the payment thereof,
shall be imprisoned for a period not to exceed 90 days.