[Adopted 10-16-2008 by Ord. No. 2008-9]
This article shall be known and may be cited as the "Fire Insurance
Escrow Ordinance."
The Borough of Lewistown hereby elects to administer and enforce
the fire insurance escrow provisions of the Insurance Company Law
of 1921, as amended by Act 98 of 1992 and Act 93 of 1994 (collectively,
the "Act"), as amended from time to time.
No insurance company, association of exchange (hereinafter "insurer")
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 Lewistown, Mifflin County, Pennsylvania, where the amount
recoverable for the fire loss to the structure under all policies
exceeds $7,500, unless the insurer is furnished by the Treasurer of
the Borough of Lewistown with a certificate pursuant to § 508(b)
[40 P.S. § 638(b)] of the Insurance Company Law of 1921,
as amended by Act 98 of 1992 and Act 93 of 1994, and unless there
is compliance with the procedures set forth in § 508(c)
and (d) of the Act, 40 P.S. § 638(c) and (d), respectively.
When all municipal claims and municipal expenses have been paid pursuant to §
137-4 above, or when the Treasurer of the Borough of Lewistown has issued a certificate described in §
137-4A of this article indicating that there are no municipal claims or municipal expenses against the property, the insurer shall pay the claim of the named insured; provided, however, that, if the loss agreed upon by the named insured and the insurer 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:
A. The insurer shall transfer from the insurance proceeds to the Secretary
of the Borough of Lewistown, in the aggregate, $2,000 for each $15,000
of such claim or fraction thereof; or
B. If at the time a loss report is submitted by the insured such insured
has submitted to the insurer, with a copy to the Borough of Lewistown,
a contractor's signed estimate of the cost of removing, repairing
or securing the building or other structure in an amount less than
the amount calculated under the foregoing transfer formula, the insurer
shall transfer to the Secretary of the Borough of Lewistown from the
insurance proceeds the amount specified in the estimate. If there
is more than one insurer, the transfer of proceeds shall be on a pro
rata basis by all insurers insuring the building or other structure.
Upon receipt of the above-described portion of the insurance
proceeds, the Secretary of the Borough of Lewistown shall do the following:
A. Place the proceeds in a separate fund to be used solely as security
against the total municipal expenses anticipated by the Borough of
Lewistown to be required in removing, repairing or securing the building
or structure as required by this article. Such costs shall include,
without limitation, any engineering, legal or administrative costs
incurred by the Borough of Lewistown in connection with such removal,
repair or securing or any proceedings related thereto.
B. Mail to the named insured at the address received from the insurer
a notice that the proceeds have been received by the Borough of Lewistown
and that the procedures under this subsection shall be followed.
C. After the transfer, the named insured may submit to the Borough of
Lewistown a contractor's signed estimate of the cost of removing,
repairing or securing the building or other structure, in which event
the Secretary of the Borough of Lewistown shall, if such estimates
are deemed by the Secretary to be reasonable, return to the insured
the amount of the funds transferred to the Borough of Lewistown in
excess of that amount required to pay the municipal expenses; provided,
however, that the Borough of Lewistown has not commenced to remove,
repair or secure the building or other structure, in which case the
Borough of Lewistown will complete the work.
D. Pay to the Borough's general fund for reimbursement of the amount
of the municipal expenses paid by the Borough of Lewistown.
E. Pay the remaining balance in the fund without interest to the named
insured upon receipt of a certificate issued by the Borough Codes
Officer that the repair, removal or securing of the building or other
structure has been completed in accordance with all applicable ordinances
of the Borough of Lewistown.
F. Nothing in this section shall be construed to limit the ability of
the Borough of Lewistown to recover any deficiency in the amount of
municipal claims or municipal expenses recovered pursuant to this
article or from insurance proceeds by an action at law or in equity
to enforce the applicable ordinances of the Borough of Lewistown or
to enter into an agreement with the named insured with regard to such
other disposition of the proceeds as the Borough may deem reasonable.
Nothing in this article shall be construed to make an insurance
company, association or exchange liable for any amount in excess of
proceeds payable under its insurance policy or for any other act performed
pursuant to this article, or to make the Borough of Lewistown or any
public official of the Borough an insured under a policy of insurance,
or to create an obligation to pay delinquent property taxes or unpaid
removal liens or expenses other than as provided in this article.
An insurance company, association or exchange making payment
of policy proceeds under this article for delinquent taxes or structural
removal liens or removal expenses incurred by the Borough of Lewistown
shall have full benefit of such payment, including all rights of subrogation
and of assignment.
The Secretary of the Borough of Lewistown shall transmit a certified
copy of this article promptly to the Pennsylvania Department of Community
and Economic Development.
Any owner of property, any named insured or insurer who violates
the provisions of this article or who shall fail to comply with any
of the requirements hereof shall be sentenced, upon conviction thereof,
to pay a fine not to exceed $1,000 plus costs and, in default of payment
of said fine and costs, to a term of imprisonment not to exceed 30
days. Each day in which an offense shall continue shall be deemed
to be a separate offense.