[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.
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)]
