[HISTORY: Adopted by the Council of the City of Coatesville
2-27-1995 as Ord. No. 983-95 (Ch. 20 of the 1989 Code). Amendments noted where
applicable.]
This Article may be known and cited as the "Fire Insurance Escrow Ordinance."
As used in this Article, the following terms shall have the meanings
indicated:
Any loss occurring after the effective date of this Article and covered
under a policy of fire insurance, including any endorsement or riders to the
policy.
The Commonwealth of Pennsylvania has enacted Act 98 of 1992, effective
September 7, 1992, amending the Insurance Company Law of 1921, to provide
procedures for the payment of certain fire loss claims. The Council of the
City of Coatesville finds it necessary and advisable, and declares the purpose
of this Article to be 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 city.[1]
[1]
Editor's Note: See 40 P.S. § 638.
The Finance Director or such official's designee (hereinafter, the municipal
officer) is hereby appointed as the designated officer who is authorized to
carry out all responsibilities and duties of the municipality stated herein.
No insurance company, association or exchange (hereinafter the "insurer")
doing business in the Commonwealth of Pennsylvania shall pay a claim of a
named insured for the fire damage to a structure located within the City of
Coatesville, (hereinafter the "municipality"), where the amount recoverable
for the fire loss to the structure under all policies exceeds seven thousand
five hundred dollars ($7,500.), unless the insurer and the named insured comply
with the provisions of this Article.
A.
Where, pursuant to Section 508(B)(1)(ii) of Act 98 of
1992,[1] the Finance Director 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 city for the removal, repair or securing
of a building or other structure on the property, the insuring agent shall
transfer to the Finance Director 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 city to payment of
the items listed 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 Finance Director 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 issuing
agent equals or exceeds sixty percent (60%) of the aggregate limits of the
liability on all fire policies covering the building or structure, the following
procedures must be followed:
(1)
Amount to be transferred.
(a)
The insuring agent shall transfer from the insurance
proceeds to the designated officer of the city in the aggregate of two thousand
dollars ($2,000.) for each fifteen thousand dollars ($15,000.), and each fraction
of that amount, of the claim; or
(b)
If, at the time of 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 issuing agent shall transfer to the city 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 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 city in excess of the estimate to the named insured,
if the city has not commenced to remove, repair or secure the building or
other structure.
(4)
Upon receipt of proceeds under this subsection, the city
shall do the following:
(a)
The designated officer shall place the proceeds in the
separate fund to be used solely as the security against the total costs of
removing, repairing or securing the building or structure which are incurred
by the city. 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 city 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 city and notify the named insured that
the procedures under this subsection shall be followed.
(c)
When repair, removal or securing of the building or structure
has been completed in accordance with all applicable regulations and orders
of the city and the required proof of such completion received by the designated
officer, and the city has not incurred any costs for repairs, removal or securing,
the fund shall be returned to the named insured. If the city 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 city
shall transfer the remaining funds to the named insured.
(d)
To the extent that interest is earned on the proceeds
held by the city pursuant to this subsection and the proceeds not returned
to the named insured, such interest shall belong to the city. 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.
(5)
Nothing in this subsection shall be construed to limit
the ability of the city to recover any deficiency. Furthermore, nothing in
this subsection shall be construed to prohibit the city and the named insured
from entering into an agreement that permits transfer of funds to the named
insured if some other reasonable disposition of the damaged property has been
negotiated.
[2]
Editor's Note: See 40 P.S. § 638(b)(1)(i)
The City Council may by resolution adopt procedures and regulations
to implement Act 98 of 1992 and this Article and may by ordinance fix reasonable
fees to be charged for municipal activities or services provided pursuant
to Section 508[1] and this Article, including but not limited to issuance of certificates
and bills, performance of inspection and opening separate fund accounts.
[1]
Editor's Note: See 40 P.S. § 638.
The municipal officer shall, upon the written request of the named insured
specifying the tax description of the property, name and address of the insurer
and the date agreed upon by the insurer and the named insured as the date
of the receipt of a loss report of the claim, furnish the insurer either of
the following within fourteen (14) working days of the request:
A.
A certificate, or at the discretion of the municipality,
a verbal notification, which shall be confirmed in writing by the insurer
to the effect that, as of the date specified in the request, there are no
delinquent taxes, assessment, penalties or user charges against the property
and that, as of the date of the municipal officer's certificate or verbal
notification, the municipality has not certified any amount as total costs
incurred by the municipality for the removal, repair or securing of a building
or other structure on the property; or
B.
A certificate and bill showing the amount of delinquent
taxes, assessments, penalties and user charges against the property as of
the date specified in the request that have not been paid as of the date of
the certificate and also showing, as of the date of the municipal officer's
certificate, the amount of the total costs, if any, certified to the municipal
officer that have been incurred by the municipality for the removal, repair
or securing of a building or other structure on the property. For the purposes
of this subsection, the municipality shall provide to the municipal officer
the total amount, if any, of such costs, if available, or the amount of costs
known to the municipality at the time of the municipal officer's certificate.
A tax, assessment, penalty or user charge becomes delinquent at the
time and on the date a lien could otherwise have been filed against the property
by the municipality under applicable law.
Upon the receipt of a certificate pursuant to § 145-8A of this Article, the insurer shall pay the claim on the named insured with the policy terms.
Upon the receipt of a certificate and bill pursuant to § 145-8B of this Article, the insurer shall return the bill to the municipal officer and transfer to the municipal officer an amount for the insurance proceeds necessary to pay the taxes, assessments, penalties, charges and costs as shown on the bill, or the full amount of the insurance proceeds, whichever is the lesser amount. The municipality shall receive the amount and apply or credit it to payment of the items shown on the bill.
Nothing in this section shall be construed to limit the ability of the
municipality to recover any deficiency.
The transfer of proceeds to the municipal officer shall be on pro-rata
basis by all insurers with applicable policies of insurance providing protection
for fire loss.
Any owner of property, any named insured or any insuring agent who violates
this Article shall be subject to a penalty of up to one thousand dollars ($1,000.)
or a period of imprisonment not exceeding ninety (90) days, or both, per violation.
