Chapter 8.80
FIRE INSURANCE PROCEEDS

Sections:

8.80.010    Scope and application.

8.80.020    Lien.

8.80.030    Transfer of funds upon settlement of claim.

8.80.040    Procedure upon receipt of moneys – Investigation.

8.80.050    Removal of structure – Excess moneys.

8.80.060    Effect upon insurance policies.

8.80.070    Insurers – Liability.

    Cross References: Finance, TMC Title 3.

    State Law References: Claims against fire insurance proceeds, K.S.A. 40-3901 et seq.

8.80.010 Scope and application.

The city is hereby authorized to utilize the procedures established by K.S.A. 40-3901 et seq., whereby no insurance company shall pay a claim of a named insured for loss or damage to any building or other structure located within the city, arising out of any fire or explosion, or windstorm where the amount recoverable for the loss or damage to the building or other structure under all policies is in excess of 75 percent of the face value of the policy covering such building or other insured structure, unless there is compliance with the procedures set out in this chapter. (Ord. 17226 § 95, 1-27-98. Code 1995 § 2-361.)

    State Law References: Authority to so provide, K.S.A. 40-3901.

8.80.020 Lien.

(a) The city council hereby creates a lien pursuant to K.S.A. 40-3902 in favor of the city on the proceeds of any insurance policy based upon a covered claim payment made for damage or loss to a building or other structure located within the city, caused by or arising out of any fire or explosion, or windstorm where the amount recoverable for all the loss or damage to the building or other structure under all policies is in excess of 75 percent of the face value of the policy covering such building or other insured structure. The lien arises upon any unpaid tax, special ad valorem levy, special assessment, or any other charge imposed upon real property by or on behalf of the city which is an encumbrance on real property, whether or not evidenced by written instrument, or such tax, levy, assessment, expense or other charge that has remained undischarged for at least one year prior to the filing of a proof of loss.

(b) Prior to final settlement on any claim covered by this section, the insurer or insurers shall contact the county treasurer to determine whether any such encumbrances are presently in existence. If encumbrances are found to exist, the insurer or insurers shall execute and transmit in an amount equal to that owing under the encumbrances a draft payable to the county treasurer. A transfer of proceeds under this section shall be on a pro rata basis by all insurance companies insuring the building or other structure. (Ord. 17226 § 96, 1-27-98. Code 1995 § 2-362.)

    Cross References: City council – mayor, Chapter 2.15 TMC.

8.80.030 Transfer of funds upon settlement of claim.

(a) When final settlement on a covered claim has been agreed to or arrived at between the named insured and the company, and the final settlement exceeds 75 percent of the face value of the policy covering any building or other insured structure, and when all amounts due the holder of a first real estate mortgage against the building or other structure, pursuant to the terms of the policy and endorsements thereto, shall have been paid, the insurance company shall execute a draft payable to the city treasurer in an amount not to exceed the sum of 15 percent of the covered claim payment unless the enforcement official has issued a certificate to the insurance company that the insured has removed the damaged building or other structure, as well as all associated debris, or has repaired, rebuilt or otherwise made the premises safe and secure.

(b) Companies insuring the building or other structure shall transfer such funds based on each company’s pro rata share of the settlement of the covered claim. Policy proceeds remaining after the transfer to the city shall be disbursed in accordance with the policy terms.

(c) Upon the transfer of the funds as required in this section, the insurance company shall provide the city with the name and address of the named insured, or insureds, the total insurance coverage applicable to the building or other structure, and the amount of the final settlement agreed to or arrived at between the insurance company or companies and the insured or insureds, whereupon the enforcement official shall contact the named insured or insureds by certified mail, notifying them that the insurance proceeds have been received by the city and apprise them of the procedures to be followed under this chapter. (Ord. 19370 § 3, 3-23-10. Code 1995 § 2-363.)

    Cross References: City treasurer, TMC 2.25.140; department of public works, TMC 2.25.170.

8.80.040 Procedure upon receipt of moneys – Investigation.

(a) Upon receipt of moneys as provided for by this chapter, the city treasurer shall immediately notify the director of development services division of such receipt, and transmit all documentation received from the insurance company to the director of development services division.

(b) Within 20 days of the receipt of the moneys as provided by this chapter, the director of development services division shall determine, based upon investigation, whether the city shall instigate proceedings under the provisions of K.S.A. 12-1750 through 12-1756, as amended, and Chapter 8.75 TMC. For purposes of this chapter, the director of development services division shall be the enforcement official with responsibility for determining an immediate hazard, pursuant to K.S.A. 12-1750 et seq., and the administrator of the environmental code services program shall be the enforcement official with responsibility for enforcement of Chapter 8.75 TMC.

(c) Prior to the expiration of the 20-day period established in this section, the enforcement official shall notify the city treasurer whether the city intends to initiate proceedings under K.S.A. 12-1750 through 12-1756, as amended, and Chapter 8.75 TMC.

(d) If the enforcement official has determined that proceedings under K.S.A. 12-1750 through 12-1756, as amended, or Chapter 8.75 TMC shall be initiated, he or she will do so immediately, but no later than 30 days after receipt of the moneys by the city treasurer.

(e) Upon notification to the city treasurer by the enforcement official that no proceedings shall be initiated under K.S.A. 12-1750 through 12-1756, as amended, or Chapter 8.75 TMC, the city treasurer shall return all moneys received to the insured or insureds as identified in the communication from the insurance company. Such return shall be accomplished within 30 days of the receipt of the moneys from the insurance company or companies. (Ord. 19370 § 4, 3-23-10. Code 1995 § 2-364.)

    Cross References: City treasurer, TMC 2.25.140; department of public works, TMC 2.25.170.

8.80.050 Removal of structure – Excess moneys.

(a) If the enforcement official has proceeded under the provisions of K.S.A. 12-1750 through 12-1756, as amended, or Chapter 8.75 TMC, all moneys in excess of that which is ultimately necessary to comply with the provisions for the removal of the building or structure, less salvage value, if any, shall be paid to the insured.

(b) If the enforcement official, with regard to a building or other structure damaged by fire, explosion, or windstorm determines that it is necessary to act under K.S.A. 12-1756 or TMC 8.75.010 et seq., any proceeds received by the city treasurer under the authority granted in this chapter relating to that building or other structure shall be used to reimburse the city for any expenses incurred by the city in proceeding under K.S.A. 12-1756 or TMC 8.75.010 et seq. Upon reimbursement from the insurance proceeds, the enforcement official shall immediately effect the release of the lien resulting therefrom. Should the expenses incurred by the city exceed the insurance proceeds paid over to the city treasurer under TMC 8.80.030, the enforcement official shall publish a new lien in an amount equal to such excess expenses incurred. (Ord. 19370 § 5, 3-23-10. Code 1995 § 2-365.)

    Cross References: City treasurer, TMC 2.25.140; department of public works, TMC 2.25.170.

8.80.060 Effect upon insurance policies.

This chapter shall not make the city a party to any insurance contract, nor is the insurer liable to any party for any amount in excess of the proceeds otherwise payable under its insurance policy. (Ord. 17226 § 100, 1-27-98. Code 1995 § 2-366.)

    State Law References: Similar provisions, K.S.A. 40-3908.

8.80.070 Insurers – Liability.

Insurers complying with this chapter or attempting in good faith to comply with this chapter shall be immune from civil and criminal liability, and such action shall not be deemed in violation of K.S.A. 40-2404 and any amendments thereto, including withholding payment of any insurance proceeds pursuant to this chapter, or releasing or disclosing any information pursuant to this chapter. (Ord. 17226 § 101, 1-27-98. Code 1995 § 2-367.)

    State Law References: Similar provisions, K.S.A. 40-3909.