CHAPTER 2
FIRE INSURANCE PROCEEDS FUND

SECTION:

4-2-1: Scope And Application

4-2-2: Lien In Favor Of City

4-2-3: Procedure Upon Final Settlement

4-2-4: Fund Created; Deposit Of Monies

4-2-5: Investigation; Removal Of Structure

4-2-6: Excess Monies After Removal

4-2-7: Disposition Of Funds; Release Of Lien

4-2-8: Effect Upon Insurance Policies

4-2-9: Insurers; Liability

4-2-1: SCOPE AND APPLICATION:

The City is hereby authorized to utilize the procedures established by Kansas Statutes Annotated section 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, where the amount recoverable for the loss or damage to the building or other structure under all policies is in excess of seventy five percent (75%) 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. 948, 4-6-1992)

4-2-2: LIEN IN FAVOR OF CITY:

   A.   Created: The City Council hereby creates a lien in favor of the City on the proceeds of any insurance policy based upon 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, where the amount recoverable for all the loss or damage to the building or other structure under all policies is in excess of seventy five percent (75%) 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 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.   Encumbrances: Prior to final settlement on any claim covered by subsection A of this Section, the insurer shall contact the County Treasurer to determine whether any such encumbrances are presently in existence. If the same are found to exist, the insurer shall execute and transmit in an amount equal to that owing under the encumbrances a draft payable to the County Treasurer.

   C.   Pro Rata Basis: Such transfer of proceeds shall be on a pro rata basis by all insurance companies insuring the building or other structure. (Ord. 948, 4-6-1992)

4-2-3: PROCEDURE UPON FINAL SETTLEMENT:

   A.   Draft Executed To City Treasurer: 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 seventy five percent (75%) 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 equal to the sum of five thousand dollars ($5,000.00) or ten percent (10%) of the covered claim payment, whichever is less, unless the Building Inspector 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 repaired, rebuilt or otherwise made the premises safe and secure. (Ord. 948, 4-6-1992; amd. 1998 Code)

   B.   Transfer Of Funds; Pro Rata Basis: Such transfer of funds shall be on a pro rata basis by all companies insuring the building or other structure. Policy proceeds remaining after the transfer to the City shall be disbursed in accordance with the policy terms.

   C.   Notice Requirements: Upon the transfer of the funds as required by subsection A of this Section, the insurance company shall provide the City with the name and address of the named insured, the total amount of the final settlement agreed to or arrived at between the insured by registered mail, notifying them that said insurance proceeds have been received by the City and apprise them of the procedures to be followed under this Chapter. (Ord. 948, 4-6-1992)