Borough of Malvern, PA Chapter 108 Fire Insurance Proceeds Escrow

[HISTORY: Adopted by the Borough Council of the Borough of Malvern 2-15-2011 by Ord. No. 2011-1. Amendments noted where applicable.]

GENERAL REFERENCES

Fire protection; hazardous materials cleanup — See Ch. 107.

§ 108-1 Statutory authority; certificate and compliance with procedures required for payment of claim.

This chapter is adopted pursuant to and implements the provisions of the Insurance Company Law of 1921, as amended, 40 P.S. § 638. No insurance company, association, or exchange doing business in the Commonwealth of Pennsylvania shall pay a claim of a named insured for fire damage to a structure located within Malvern Borough, if the amount recoverable under any or all insurance policies exceeds $7,500, unless the insurance company, association, or exchange is furnished with a certificate pursuant to § 108-2 of this chapter and unless there is compliance with the procedures set forth in §§ 108-3 and 108-4 of this chapter.

§ 108-2 Fire loss certificate.

A. The Borough Treasurer shall, upon the written request of the named insured specifying the tax description of the property, name, and address of the insurance company, association, or exchange and the date agreed upon by the insurance company, association, or exchange and the named insured as the date of the receipt of a loss report of the claim, and the payment of a certification fee, as shall be established from time to time by resolution of the Borough Council, for the administrative expense of processing the request and copying, furnish the insurance company, association, or exchange either of the following within 14 working days of the request:

(1) A certificate or, at the discretion of the Borough, a verbal notification which shall be confirmed in writing by the insured to the effect that, as of the date specified in the request, there are no delinquent taxes, assessments, penalties, or user charges against the property and that, as of the date of the Treasurer's certificate or verbal notification, the Borough has not certified any amounts as total costs incurred by the Borough for the removal, repair or securing of a building or other structure on the property.

(2) A certificate and bill showing the amount of delinquent taxes, assessments, penalties, or user charges against the property as of the date specified showing, as of the date of the Treasurer's certificate, the amount of the total costs, if any, certified to the Treasurer that have been incurred by the Borough for the removal, repair or securing of a building or other structure on the property. For the purposes of this chapter, 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 Borough under applicable law or ordinance.

B. Receipt of certificate.

(1) Upon receipt of a certificate pursuant to Subsection A(1) of this section, the insurance company, association, or exchange shall pay the claim of the named insured in accordance with the policy terms, unless 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. In the case of such loss, the insurance company, association, or exchange, the insured property owner and the Borough shall follow the procedures set forth in §§ 108-3 and 108-4 of this chapter.

(2) Upon the receipt of a certificate and bill pursuant to Subsection B(1) of this section, the insurance company, association, or exchange shall return the bill to the Treasurer and transfer to the Treasurer an amount from the insurance proceeds necessary to pay the taxes, assessments, penalties, charges, and costs shown on the bill. In the case of a loss subject to §§ 108-3 and 108-4 of this chapter, the insurance company, association, or exchange shall transfer to the Treasurer the amount from the insurance proceeds shown on the bill by separate draft from the amounts transferred under § 108-3 of the chapter. The Borough shall receive the amount and apply or credit it to payment of the items shown in the bill.

§ 108-3 Establishment of Municipal Fire Insurance Escrow.

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 Treasurer the amounts required by and in accordance with the procedures set forth in 40 P.S. § 638(c). 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 structure or other structure after the transfer, and the Borough Treasurer 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. The Borough Treasurer shall carry out the duties of this section.

§ 108-4 Disposition of escrow proceeds.

Upon receipt of the proceeds by the Borough as authorized by § 108-3, the Borough Treasurer shall place the proceeds in a separate fund to be used solely as security against the total cost of removing, repairing, and/or securing incurred by the Borough. When transferring the funds as required in § 108-3, 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 municipality and notify the named insured that the procedures under this section shall be followed. The fund shall be returned to the named insured when repairs, removal, or security of the building or other structure has been completed and the required proof received by the Borough Treasurer if the Borough has not incurred any costs for repairs, removal, or securing. 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. Nothing in this chapter shall be construed to limit the ability of the Borough to recover any deficiency. Further, 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 if some other reasonable disposition of the damaged property has been negotiated.

§ 108-5 Included costs.

The total costs incurred by the Borough for the removal, repair, or securing of a building or other structure under this chapter shall include, but not be limited to, all administrative, personnel and overhead costs, attorney's fees and court costs incurred by the Borough in accordance with generally accepted accounting procedures.