SENATE AMENDED
PRIOR PRINTER'S NOS. 1193, 3560, 3818, PRINTER'S NO. 3932
3864, 3818
No. 1022 Session of 1977
INTRODUCED BY MESSRS. REED, BROWN, ZITTERMAN, ZELLER AND
LAUGHLIN, APRIL 27, 1977
AS AMENDED ON THIRD CONSIDERATION, IN SENATE, NOVEMBER 14, 1978
AN ACT
1 Establishing the duties and responsibilities of owners of
2 certain property damaged or destroyed by fire and prescribing
3 penalties, creating certain liens and priority in insurance
4 proceeds in favor of cities of the first, second, second A
5 and third class, regulating the disbursement of insurance
6 proceeds of the insured, and providing for direct payment and
7 distribution of insurance proceeds to cities of the first,
8 second, second A and third class under certain terms and
9 conditions.
10 The General Assembly of the Commonwealth of Pennsylvania
11 hereby enacts as follows:
12 Section 1. Restoration of real property from insurance
13 proceeds.
14 (a) The owner, mortgagee or insured party of any real
15 property as described in section 7 damaged or destroyed by fire
16 shall use as much of the payment received under a policy
17 providing fire insurance covering losses as is necessary to
18 restore or replace in whole or in part the property in
19 accordance with the provisions of applicable building, housing,
20 health, fire and safety codes.
1 (b) In lieu of restoration, the owner, mortgagee or insured
2 party of a damaged or destroyed structure may use such proceeds
3 to board up or seal the windows and doors of the structure as
4 permissible under applicable municipal building, housing,
5 health, fire and safety codes or such person may demolish the
6 structure.
7 (c) This act shall not excuse a new owner from complying
8 with building, housing, health, fire and safety codes covering
9 the structure in which the fire occurred.
10 Section 2. Liens and priority in insurance proceeds in favor
11 of cities.
12 Notwithstanding any other provision of law of this
13 Commonwealth, a lien is hereby created in favor of the city upon
14 insurance proceeds for the following: Delinquent real property
15 taxes, municipal assessments, water and sewer charges, municipal
16 claims, liens and encumbrances, and for all costs incurred by
17 the city in relation to the real property insured including but
18 not limited to the cost of abating any nuisance public or
19 private created by the covered peril, and of inspecting,
20 repairing, demolishing, removing or otherwise disposing of any
21 property damaged by a covered peril. The lien of any city
22 arising under the provisions of this act shall have priority
23 over the claim of any insured owner, assignee or other
24 interested party except a mortgagee and where otherwise provided
25 by the laws of the United States.
26 Section 3. Payment of insurance proceeds.
27 (a) It shall be unlawful for any insurance company
28 authorized under section 202(b)(1) of the act of May 17, 1921
29 (P.L.682, No.284), known as "The Insurance Company Law of 1921,"
30 to issue insurance policies providing fire insurance coverage in
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1 this Commonwealth to pay any claim on a policy including any
2 policy written pursuant to the provisions of the act of July 31,
3 1968 (P.L.738, No.233), known as "The Pennsylvania Fair Plan
4 Act," covering a dwelling or structure which is vacant or any
5 claim exceeding $5,000 on any other policy issued by such
6 company for fire damage to any real property as described in
7 section 7 until the insured submits to the insurance company, on
8 forms and in the manner prescribed by the Insurance
9 Commissioner, proof that all delinquent taxes, assessments,
10 charges, claims, liens, encumbrances and costs as enumerated in
11 section 2 has been paid.
12 (b) The failure on the part of the insured property owner to
13 pay in full any item enumerated in section 2 shall require the
14 insurance company to withhold payment of all or a portion of THE <--
15 PROCEEDS otherwise due under the policy to the insured property
16 owner, mortgagee, assignee or other interested party until all
17 such taxes, assessments, charges, claims, liens, encumbrances
18 and costs as enumerated in section 2 have been paid. The portion
19 withheld shall not exceed the amount due to satisfy delinquent
20 taxes, assessments, charges, claims, liens, encumbrances and
21 costs as enumerated in section 2.
22 (c) The insurance company shall pay directly to the city any
23 amount shown as delinquent on the forms prescribed by subsection
24 (a) and shall deduct the amount thereof from the proceeds
25 otherwise payable to the insured. The insured shall apply the
26 balance of any fire insurance proceeds paid to him to
27 restoration of the property as required by section 1 (a),(b) and
28 (c). A release of the city's lien for the items enumerated in
29 section 2 may be secured by the insured by:
30 (1) full payment of all delinquent taxes, assessments,
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1 charges, claims, liens, encumbrances and costs as enumerated
2 in section 2; or
3 (2) entry into an agreement, which shall be binding and
4 enforceable at law, with the city in which the insured agrees
5 to apply a portion or all of the proceeds of any insurance
6 policy to the demolition or repair, rehabilitation,
7 restoration and maintenance of the property, to bring the
8 property into compliance with all applicable municipal codes,
9 and to pay all delinquent municipal claims and liens, under
10 such terms and conditions as the city in its sole discretion
11 determines to impose.
12 Section 4. Notification to insurance company. <--
13 (a) The insurance company shall submit the required forms to
14 the city within three business days of receipt of the claim by
15 the insured. The city shall process the forms required to be
16 submitted by the insured to the insurance company under this act
17 within five business days of presentation by the company to the
18 city. Failure of the city to process any required form within
19 five business days shall result in a 1% deduction per day in the
20 amount due to the city under the provisions of this act.
21 (b) The insured shall submit completed forms from the city
22 to the insurance company within 15 days of the date the form is
23 returned by the city to the insured. In the event that an
24 agreement has been entered into pursuant to section 3(c)(2), the
25 insured shall submit said agreement to the insurance company
26 within 15 days of its execution. Upon receipt of the completed
27 required forms or executed agreement, the insurance company may
28 release to the insured, in a manner consistent with the
29 information shown on the submitted completed forms or with the
30 terms of any agreement, whichever is applicable, insurance
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1 proceeds payable under any policy of insurance.
2 (c) If the insured fails to submit the forms completed by
3 the city, or any agreement entered into with the city, to the
4 insurance company within the 15 day time period prescribed in
5 section 4(b), the city may submit a claim in its own behalf for
6 all delinquent taxes, assessments, charges, claims, liens,
7 encumbrances and costs as enumerated in section 2, which shall
8 be paid in full to the city by the insurance company out of the
9 insurance proceeds otherwise payable to the insured.
10 (d) An insurance company shall not be liable to any insured
11 owner, mortgagee, assignee, or other interested party for
12 amounts disbursed to a city in accordance with the provisions of
13 this act, nor to a city for amounts not disbursed to a city
14 based upon completed forms or agreements as prescribed in
15 section 3(a) indicating the nonexistence of any delinquent
16 taxes, assessments, charges, claims, liens, encumbrances and
17 costs as enumerated in section 2. An insurance company shall not
18 be held liable for the release of any information required to be
19 released under this act.
20 SECTION 4. NOTIFICATION TO INSURANCE COMPANY. <--
21 (A) THE INSURANCE COMMISSIONER SHALL WITHIN 30 DAYS OF THE
22 EFFECTIVE DATE OF THIS ACT, PROMULGATE A UNIFORM CERTIFICATION
23 OF LIENS FOR USE BY CITIES TO CERTIFY TO INSURANCE COMPANIES THE
24 EXISTENCE OR NONEXISTENCE OF LIENS AS DEFINED IN SECTION 2 AND
25 THE AMOUNT THEREOF.
26 (B) CITIES SHALL OBTAIN THE CERTIFICATION OF LIENS FORM
27 PROMULGATED BY THE INSURANCE COMMISSIONER UNDER SUBSECTION (A)
28 AND SHALL, WITHIN FIVE BUSINESS DAYS OF A WRITTEN REQUEST OF ANY
29 INSURED, COMPLETE AND RETURN TO THE INSURED A COMPLETE
30 CERTIFICATION OF LIEN. FAILURE OF THE CITY TO PROCESS ANY
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1 REQUIRED FORM WITHIN FIVE BUSINESS DAYS SHALL RESULT IN A 1%
2 DEDUCTION PER ADDITIONAL BUSINESS DAY IN THE AMOUNT DUE TO THE
3 CITY UNDER THE PROVISIONS OF THIS ACT.
4 (C) THE INSURED SHALL SUBMIT COMPLETED FORMS FROM THE CITY
5 TO THE INSURANCE COMPANY WITHIN 15 DAYS OF THE DATE THE FORM IS
6 RETURNED BY THE CITY TO THE INSURED. IN THE EVENT THAT AN
7 AGREEMENT HAS BEEN ENTERED INTO PURSUANT TO SECTION 3(C)(2), THE
8 INSURED SHALL SUBMIT SAID AGREEMENT TO THE INSURANCE COMPANY
9 WITHIN 15 DAYS OF ITS EXECUTION. UPON RECEIPT OF THE COMPLETED
10 REQUIRED FORMS OR EXECUTED AGREEMENT, THE INSURANCE COMPANY MAY
11 RELEASE TO THE INSURED, IN A MANNER CONSISTENT WITH THE
12 INFORMATION SHOWN ON THE SUBMITTED COMPLETED FORMS OR WITH THE
13 TERMS OF ANY AGREEMENT, WHICHEVER IS APPLICABLE, INSURANCE
14 PROCEEDS PAYABLE UNDER ANY POLICY OF INSURANCE.
15 (D) IF THE INSURED FAILS TO SUBMIT THE FORMS COMPLETED BY
16 THE CITY OR ANY AGREEMENT ENTERED INTO WITH THE CITY TO THE
17 INSURANCE COMPANY WITHIN THE 15-DAY PERIOD PRESCRIBED IN
18 SUBSECTION (C), THE CITY MAY SUBMIT A CLAIM IN ITS OWN BEHALF
19 FOR ALL DELINQUENT TAXES, ASSESSMENTS, CHARGES, CLAIMS, LIENS,
20 ENCUMBRANCES AND COSTS AS ENUMERATED IN SECTION 2, WHICH SHALL
21 BE PAID IN FULL TO THE CITY BY THE INSURANCE COMPANY OUT OF THE
22 INSURANCE PROCEEDS OTHERWISE PAYABLE TO THE INSURED.
23 (E) AN INSURANCE COMPANY SHALL NOT BE LIABLE TO ANY INSURED
24 OWNER, MORTGAGEE, ASSIGNEE, OR OTHER INTERESTED PARTY FOR
25 AMOUNTS DISBURSED TO A CITY IN ACCORDANCE WITH THE PROVISIONS OF
26 THIS ACT, NOR TO A CITY FOR AMOUNTS NOT DISBURSED TO A CITY
27 BASED UPON COMPLETED FORMS OR AGREEMENTS AS PRESCRIBED IN
28 SECTION 3(A) INDICATING THE NONEXISTENCE OF ANY DELINQUENT
29 TAXES, ASSESSMENTS, CHARGES, CLAIMS, LIENS, ENCUMBRANCES AND
30 COSTS AS ENUMERATED IN SECTION 2. AN INSURANCE COMPANY SHALL NOT
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1 BE HELD LIABLE FOR THE RELEASE OF ANY INFORMATION REQUIRED TO BE
2 RELEASED UNDER THIS ACT.
3 Section 5. Disclosure by insurance company.
4 Every insurance company subject to the provisions of this act
5 shall notify its insureds of the provisions of this act upon
6 issuance or renewal of policies providing fire insurance.
7 Section 6. Penalties.
8 Any insured who fails to comply with section 1 is guilty of a
9 summary offense and shall, upon conviction, be sentenced to pay
10 a fine to the city not exceeding $1,000 or to undergo
11 imprisonment for not more than one year, or both.
12 Section 7. Application.
13 The provisions of this act shall be applicable to all
14 unoccupied dwellings or structures, all residential property
15 except single family owner occupied dwellings, and all
16 commercial and industrial properties located within cities of
17 the first, second, second A and third class of the Commonwealth
18 of Pennsylvania.
19 Section 8. Rules and regulations.
20 The Insurance Commissioner shall promulgate such rules and
21 regulations as are deemed necessary for the effective
22 implementation and operation of this act.
23 Section 9. Effective date.
24 This act shall take effect in 180 days and shall apply to all
25 policies of insurance as they are issued, written or renewed
26 subsequent to such effective date.
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