Senate Study Bill 3016 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON STATE GOVERNMENT BILL BY CHAIRPERSON DANIELSON) A BILL FOR An Act requiring a demolition reserve on certain fire and 1 casualty insurance claims on property located in the 2 unincorporated area of a county. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5244XC (2) 86 av/nh

S.F. _____ Section 1. Section 515.139, subsection 1, paragraph a, Code 1 2016, is amended by striking the paragraph. 2 Sec. 2. Section 515.139, subsections 2, 3, 4, and 5, Code 3 2016, are amended to read as follows: 4 2. An insurer which has received a proof of loss in excess 5 of seventy-five percent of the face value of the policy 6 covering a building or other insured structure, shall notify 7 the city council of the city within which the property is 8 located or the board of supervisors of the unincorporated area 9 of the county in which the property is located, as applicable . 10 The notice shall be made by certified mail within five working 11 days after receipt of the proof of loss. 12 3. The city or the county shall release all interest in 13 the demolition cost reserve within one hundred eighty days 14 after receiving notice of the existence of the demolition cost 15 reserve unless the city or the county has instituted legal 16 proceedings for the demolition of the building or other insured 17 structure, and has notified the insurer in writing of the 18 institution of the legal proceedings. Failure of the city 19 or the county to notify the insurer of the legal proceedings 20 terminates the city’s or the county’s claim to any proceeds 21 from the reserve. 22 4. A reserve for demolition costs is no longer required if 23 either of the following is true: 24 a. The insurer has received notice from both the insured and 25 the city council or the board of supervisors, as applicable, 26 that the insured has completed repairs to the property or has 27 completed demolition of the property in compliance with all 28 applicable statutes and local ordinances. 29 b. The city or the county has failed to notify the insurer 30 as provided under subsection 3 . 31 5. If the city or the county has instituted legal 32 proceedings, undertaken emergency action, or is required to 33 demolish the damaged property at city or county expense, the 34 city or county, as applicable, shall present to the insurer 35 -1- LSB 5244XC (2) 86 av/nh 1/ 3

S.F. _____ costs incurred, since the date of the fire or other occurrence, 1 including but not limited to legal costs, engineering costs, 2 and demolition costs related directly to the enforcement of 3 any local ordinance, and the insurer shall compensate the city 4 or the county for the incurred costs up to the amount in the 5 demolition cost reserve. Any amount left from the demolition 6 cost reserve after the cost of demolition of the property is 7 paid to the city or the county shall be paid to the insured if 8 the insured is entitled to the remaining proceeds under the 9 policy. 10 EXPLANATION 11 The inclusion of this explanation does not constitute agreement with 12 the explanation’s substance by the members of the general assembly. 13 This bill requires an insurer to set up a demolition cost 14 reserve on certain fire and casualty insurance claims received 15 for damages to property located in the unincorporated area of a 16 county. 17 An insurer is required to notify the board of supervisors of 18 the county in which the property is located when the insurer 19 receives a proof of loss from a policyholder that exceeds 75 20 percent of the face value of the policy covering the insured 21 building or structure and damage to the property renders it 22 uninhabitable or unfit for its purpose without repair. The 23 insurer is also required to reserve $10,000 or 10 percent of 24 the payment for damages to the property, whichever is greater, 25 for demolition costs. 26 The county must release all interest in the demolition 27 cost reserve within 180 days after receiving notice of the 28 reserve unless the county has instituted legal proceedings for 29 demolition of the building or structure and has so notified 30 the insurer. The reserve is no longer required if the insurer 31 receives notice from both the insured and the county board 32 of supervisors that the insured has completed repairs to or 33 demolition of the property or if the county fails to notify the 34 insurer about legal proceedings for demolition. 35 -2- LSB 5244XC (2) 86 av/nh 2/ 3

S.F. _____ If the county institutes legal proceedings, undertakes 1 emergency action, or is required to demolish the damaged 2 property at county expense, the county must present costs 3 incurred to the insurer, and the insurer shall then compensate 4 the county for those costs up to the amount of the reserve. 5 Any amount left in the reserve after payment to the county is 6 payable to the insured if the insured is entitled to remaining 7 proceeds under the policy. 8 An insurer is not liable under this provision for any amount 9 in excess of the limits of liability set out by the policy. 10 An insurer that complies with or attempts in good faith to 11 comply with this provision is immune from civil and criminal 12 liability. 13 Currently this statutory provision only applies to damaged 14 property which is located within the corporate limits of a city 15 and such demolition costs from a reserve are payable only to 16 a city. 17 -3- LSB 5244XC (2) 86 av/nh 3/ 3