[HISTORY: Adopted by the Borough Council of the Borough of Lewistown as indicated in article histories. Amendments noted where applicable.]
[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.
Where there are delinquent taxes, assessments, penalties or user charges against the property ("municipal claims") or there are expenses which the Borough of Lewistown has incurred as costs for removal, repair or securing of a building or other structure on the property (collectively "municipal expenses"), the Secretary of the Borough of Lewistown shall immediately certify and render a bill for such work, if not already done, to the Treasurer. Upon written request of the named insured specifying the tax description of the property, the name and address of the insurer and the date of receipt by the insurer of a loss report of the claim, the Treasurer of the Borough of Lewistown shall furnish a certificate within 14 business days after the request to the insurer, either:
Taxes, assessments, penalties and user charges shall be deemed delinquent for this purpose if a lien could have been filed for such claims under applicable law. Upon receipt of a certificate and bill pursuant to Subsection A of this section, the insurer shall transfer to the Treasurer of the Borough of Lewistown an amount from the insurance proceeds sufficient to pay said sums prior to making payment to the named insured, subject to the provisions of § 137-5, Procedure where loss equals or exceeds 60% of the aggregate limits of liability, hereof.
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:
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
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:
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.
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.
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.
Pay to the Borough's general fund for reimbursement of the amount of the municipal expenses paid by the Borough of Lewistown.
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.
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.