SSB 3016 (LSB 5244XC (2) 86)

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 casualty insurance claims on property located in the unincorporated area of a county.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 515.139, subsection 1, paragraph a, Code 2016, is amended by striking the paragraph.
    Sec. 2.  Section 515.139, subsections 2, 3, 4, and 5, Code 2016, are amended to read as follows:
   2.  An insurer which has received a proof of loss in excess of seventy-five percent of the face value of the policy covering a building or other insured structure, shall notify the city council of the city within which the property is located or the board of supervisors of the unincorporated area of the county in which the property is located, as applicable. The notice shall be made by certified mail within five working days after receipt of the proof of loss.
   3.  The city or the county shall release all interest in the demolition cost reserve within one hundred eighty days after receiving notice of the existence of the demolition cost reserve unless the city or the county has instituted legal proceedings for the demolition of the building or other insured structure, and has notified the insurer in writing of the institution of the legal proceedings. Failure of the city or the county to notify the insurer of the legal proceedings terminates the city’s or the county’s claim to any proceeds from the reserve.
   4.  A reserve for demolition costs is no longer required if either of the following is true:
   a.  The insurer has received notice from both the insured and the city council or the board of supervisors, as applicable, that the insured has completed repairs to the property or has completed demolition of the property in compliance with all applicable statutes and local ordinances.
   b.  The city or the county has failed to notify the insurer as provided under subsection 3.
   5.  If the city or the county has instituted legal proceedings, undertaken emergency action, or is required to demolish the damaged property at city or county expense, the city or county, as applicable, shall present to the insurer costs incurred, since the date of the fire or other occurrence, including but not limited to legal costs, engineering costs, and demolition costs related directly to the enforcement of any local ordinance, and the insurer shall compensate the city or the county for the incurred costs up to the amount in the demolition cost reserve. Any amount left from the demolition cost reserve after the cost of demolition of the property is paid to the city or the county shall be paid to the insured if the insured is entitled to the remaining proceeds under the policy.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill requires an insurer to set up a demolition cost reserve on certain fire and casualty insurance claims received for damages to property located in the unincorporated area of a county.
   An insurer is required to notify the board of supervisors of the county in which the property is located when the insurer receives a proof of loss from a policyholder that exceeds 75 percent of the face value of the policy covering the insured building or structure and damage to the property renders it uninhabitable or unfit for its purpose without repair. The insurer is also required to reserve $10,000 or 10 percent of the payment for damages to the property, whichever is greater, for demolition costs.
   The county must release all interest in the demolition cost reserve within 180 days after receiving notice of the reserve unless the county has instituted legal proceedings for demolition of the building or structure and has so notified the insurer. The reserve is no longer required if the insurer receives notice from both the insured and the county board of supervisors that the insured has completed repairs to or demolition of the property or if the county fails to notify the insurer about legal proceedings for demolition.
   If the county institutes legal proceedings, undertakes emergency action, or is required to demolish the damaged property at county expense, the county must present costs incurred to the insurer, and the insurer shall then compensate the county for those costs up to the amount of the reserve. Any amount left in the reserve after payment to the county is payable to the insured if the insured is entitled to remaining proceeds under the policy.
   An insurer is not liable under this provision for any amount in excess of the limits of liability set out by the policy. An insurer that complies with or attempts in good faith to comply with this provision is immune from civil and criminal liability.
   Currently this statutory provision only applies to damaged property which is located within the corporate limits of a city and such demolition costs from a reserve are payable only to a city.