PRIOR PRINTER'S NOS. 3193, 3657 PRINTER'S NO. 3959
No. 2535 Session of 1994
INTRODUCED BY GRUITZA AND COLAFELLA, FEBRUARY 2, 1994
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
JUNE 20, 1994
AN ACT
1 Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
2 act relating to insurance; amending, revising, and
3 consolidating the law providing for the incorporation of
4 insurance companies, and the regulation, supervision, and
5 protection of home and foreign insurance companies, Lloyds
6 associations, reciprocal and inter-insurance exchanges, and
7 fire insurance rating bureaus, and the regulation and
8 supervision of insurance carried by such companies,
9 associations, and exchanges, including insurance carried by
10 the State Workmen's Insurance Fund; providing penalties; and
11 repealing existing laws," further providing for the payment
12 of certain fire loss claims.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. Section 508 of the act of May 17, 1921 (P.L.682,
16 No.284), known as The Insurance Company Law of 1921, added July
17 9, 1992 (P.L.678, No.98), is amended to read:
18 Section 508. Municipal Certificate Required Prior to Payment
19 of Fire Loss Claims.--(a) No insurance company, association or
20 exchange doing business in this Commonwealth shall pay a claim
21 of a named insured for fire damage to a structure located within
22 a municipality where the amount recoverable for the fire loss to
1 the structure under all policies exceeds [five thousand dollars
2 ($5,000)] seven thousand five hundred dollars ($7,500) unless
3 the insurance company, association or exchange is furnished with
4 a certificate pursuant to subsection (b) of this section and
5 unless there is compliance with the procedures set forth in
6 subsections (c) and (d) of this section.
7 (b) (1) The municipal treasurer shall, upon the written
8 request of the named insured specifying the tax description of
9 the property, name and address of the insurance company,
10 association or exchange and the date agreed upon by the
11 insurance company, association or exchange and the named insured
12 as the date of the receipt of a [proof of] loss report of the
13 claim, furnish the [named insured] insurance company,
14 association or exchange either of the following[, which shall
15 then be supplied by the named insured to the company,
16 association or exchange] within fourteen working days of the
17 request:
18 (i) a certificate, or at the discretion of the municipality,
19 a verbal notification which shall be confirmed in writing by the
20 insurer to the effect that, as of the date specified in the
21 request, there are no delinquent taxes, assessments, penalties
22 or user charges against the property and that, as of the date of
23 the treasurer's certificate or verbal notification, no
24 municipality has certified any amount as total costs incurred by
25 the municipality for the removal, repair or securing of a
26 building or other structure on the property; or
27 (ii) a certificate and bill showing the amount of delinquent
28 taxes, assessments, penalties and user charges against the
29 property as of the date specified in the request that have not
30 been paid as of the date of the certificate and also showing, as
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1 of the date of the treasurer's certificate, the amount of the
2 total costs, if any, certified to the treasurer that have been
3 incurred by a municipality for the removal, repair or securing
4 of a building or other structure on the property. For the
5 purposes of this subclause, the municipality shall certify to
6 the treasurer the total amount, if any, of such costs. A tax,
7 assessment, penalty or user charge becomes delinquent at the
8 time and on the date a lien could otherwise have been filed
9 against the property by the municipality under applicable law.
10 (2) (i) Upon the receipt of a certificate pursuant to
11 clause (1)(i) of this subsection, the insurance company,
12 association or exchange shall pay the claim of the named insured
13 in accordance with the policy terms, unless the loss agreed to
14 between the named insured and the company, association or
15 exchange equals or exceeds sixty per centum (60%) of the
16 aggregate limits of liability on all fire policies covering the
17 building or other structure. In the case of such a loss, the
18 insurance company, association or exchange, the insured property
19 owner and the municipality shall follow the procedures set forth
20 in subsections (c) and (d) of this section.
21 (ii) Upon the receipt of a certificate and bill pursuant to
22 clause (1)(ii) of this subsection, the insurance company,
23 association or exchange shall return the bill to the treasurer
24 and transfer to the treasurer an amount from the insurance
25 proceeds necessary to pay the taxes, assessments, penalties,
26 charges and costs as shown on the bill. The municipality shall
27 receive the amount and apply or credit it to payment of the
28 items shown in the bill.
29 (c) When the loss agreed to between the named insured and
30 the company, association or exchange equals or exceeds sixty per
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1 centum (60%) of the aggregate limits of liability on all fire
2 policies covering the building or other structure, the insurance
3 company, association or exchange shall transfer from the
4 insurance proceeds to the designated officer of the municipality
5 in the aggregate [one thousand dollars ($1,000) for each twenty
6 thousand dollars ($20,000)] two thousand dollars ($2,000) for
7 each fifteen thousand dollars ($15,000) and each fraction of
8 that amount of a claim, or, if at the time of a [proof of loss
9 agreed to between the named insured and the insurance company,
10 association or exchange] loss report the named insured has
11 submitted a contractor's signed estimate of the costs of
12 removing, repairing or securing the building or other structure
13 in an amount less than the amount calculated under the foregoing
14 transfer formula, the insurance company, association or exchange
15 shall transfer from the insurance proceeds the amount specified
16 in the estimate. The transfer of proceeds shall be on a pro rata
17 basis by all companies, associations or exchanges insuring the
18 building or other structure. Policy proceeds remaining after the
19 transfer to the municipality shall be [on a pro rata basis by
20 all companies, associations or exchanges insuring the building
21 or other structure. Policy proceeds remaining after the transfer
22 to the municipality shall be] disbursed in accordance with the
23 policy terms. The named insured may submit a contractor's signed
24 estimate of the costs of removing, repairing or securing the
25 building or other structure after the transfer, and the
26 designated officer shall return the amount of the fund in excess
27 of the estimate to the named insured if the municipality has not
28 commenced to remove, repair or secure the building or other
29 structure. This subsection only applies to municipalities that
30 have adopted an ordinance authorizing the procedure described in
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1 subsections (c) and (d) of this section and applies only to fire
2 losses that occur after the adoption of the ordinance. The
3 ordinance shall designate the officer authorized to carry out
4 the duties of this section.
5 (d) Upon receipt of proceeds by the municipality as
6 authorized by this section, the designated officer shall place
7 the proceeds in a separate fund to be used solely as security
8 against the total cost of removing, repairing or securing
9 incurred by the municipality. When transferring the funds as
10 required in subsection (c) of this section, an insurance
11 company, association or exchange shall provide the municipality
12 with the name and address of the named insured, whereupon the
13 municipality shall contact the named insured, certify that the
14 proceeds have been received by the municipality and notify the
15 named insured that the procedures under this subsection shall be
16 followed. The fund shall be returned to the named insured when
17 repairs, removal or securing of the building or other structure
18 have been completed and the required proof received by the
19 designated officer if the municipality has not incurred any
20 costs for repairs, removal or securing. If the municipality has
21 incurred costs for repairs, removal or securing of the building
22 or other structure, the costs shall be paid from the fund, and,
23 if excess funds remain, the municipality shall transfer the
24 remaining funds to the named insured. Nothing in this section
25 shall be construed to limit the ability of a municipality to
26 recover any deficiency. Further, nothing in this subsection
27 shall be construed to prohibit the municipality and the named
28 insured from entering into an agreement that permits the
29 transfer of funds to the named insured if some other reasonable
30 disposition of the damaged property has been negotiated.
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1 (e) Proof of payment by the insurance company, association
2 or exchange of proceeds under a policy in accordance with
3 subsection (c) of this section is conclusive evidence of the
4 discharge of its obligation to the insured under the policy to
5 the extent of the payment and of compliance by the company,
6 association or exchange with subsection (c) of this section.
7 (f) Nothing in this section shall be construed to make an
8 insurance company, association or exchange liable for any amount
9 in excess of proceeds payable under its insurance policy or for
10 any other act performed pursuant to this section or to make a
11 municipality or public official an insured under a policy of
12 insurance or to create an obligation to pay delinquent property
13 taxes or unpaid removal liens or expenses other than as provided
14 in this section.
15 (g) An insurance company, association or exchange making
16 payments of policy proceeds under this section for delinquent
17 taxes or structure removal liens or removal expenses incurred by
18 a municipality shall have a full benefit of such payment,
19 including all rights of subrogation and of assignment.
20 (h) Subsections (a) and (b) of this section shall apply only
21 to municipalities that have adopted an ordinance authorizing the
22 procedure set forth in subsections (a) and (b) and only to fire
23 losses that occur after the effective date of the ordinance.
24 (i) When an ordinance is first passed or adopted by a
25 municipality under subsections (a) and (b) of this section or
26 subsections (c) and (d) of this section, or both, an exact copy
27 of the ordinance shall be filed with the Department of Community
28 Affairs together with the name, position and phone number of the
29 municipal official responsible for compliance with this section.
30 Each municipality enacting an ordinance under this section shall
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1 supply the information required by this subsection to the
2 Department of Community Affairs as part of the implementation of
3 its ordinance. THE DEPARTMENT OF COMMUNITY AFFAIRS SHALL <--
4 PERIODICALLY PRODUCE A REGISTER LISTING THOSE MUNICIPALITIES
5 FILING THE ORDINANCE. THIS REGISTER SHALL BE MADE AVAILABLE TO
6 INSURANCE COMPANIES AT MINIMUM COST. An insurance company,
7 association or exchange shall not be required to comply with any
8 municipal ordinance if the municipality fails to provide a copy
9 of the ordinance to the Department of Community Affairs.
10 (j) The term "municipality," as used in this section, shall
11 mean any city, borough, town, township or home rule
12 municipality. The term "treasurer," as used in this section,
13 shall mean an elected treasurer or other appropriate municipal
14 officer authorized to collect real property taxes.
15 [(h)] (k) This section shall be liberally construed to
16 accomplish its purpose to deter the commission of arson and
17 related crimes, to discourage the abandonment of property and to
18 prevent urban blight and deterioration.
19 Section 2. This act shall take effect immediately IN 90 <--
20 DAYS.
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