City of Coatesville, PA
Chester County
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Table of Contents
Table of Contents
[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:
FIRE LOSS or CLAIM FOR FIRE DAMAGE
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.
[1]
Editor's Note: Amended at time of adoption of Code; see Ch. 1, General Provisions, Art. I.