State of Illinois
91st General Assembly

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[ Introduced ][ House Amendment 001 ]


HB0496 Engrossed                               LRB9101701JSpc

 1        AN  ACT  to amend the Illinois Insurance Code by changing
 2    Section 397.1.

 3        Be it enacted by the People of  the  State  of  Illinois,
 4    represented in the General Assembly:

 5        Section  5.  The  Illinois  Insurance  Code is amended by
 6    changing Section 397.1 as follows:

 7        (215 ILCS 5/397.1) (from Ch. 73, par. 1009.1)
 8        Sec. 397.1.  Certificate regarding payment of  taxes  and
 9    expenses on property sustaining loss.
10        (a)  It  shall  be  unlawful  for any company transacting
11    insurance business in this State to pay a claim of an insured
12    property owner for loss by fire or explosion to  a  structure
13    located  in  this State where the amount recoverable for loss
14    to the structure under a policy exceeds  $25,000,  until  the
15    insurance  company  receives the certificate required by this
16    Section. A notice, to the  State's  Attorney  of  the  county
17    where the structure is located, of the insurers intent to pay
18    a  claim  shall  include  the name of the property owner, the
19    address of the property, its legal description, the permanent
20    real estate index number that  identifies  the  property  for
21    purposes of taxation, and the amount of the claim to be paid.
22        (b)  For   purposes   of   this  Section,  the  following
23    definitions are applicable:
24             (1)  "Insured property owner" is a person  named  as
25        an insured who is the owner, title-holder or mortgagee of
26        a  structure,  the  holder  of an interest secured by the
27        structure, the beneficiary of  a  land  trust  owning  or
28        holding  title  to a structure, the lessee of a structure
29        with a contractual obligation for property taxes, or  the
30        assignee of any such person.
31             (2)  "Amount   recoverable"  is  the  dollar  amount
HB0496 Engrossed            -2-                LRB9101701JSpc
 1        payable under all insurance  policies  for  loss  to  the
 2        structure.
 3             (3)  "Proceeds"  is  the  dollar  amount payable for
 4        loss to the structure under an insurance policy.
 5             (4)  "Delinquent property taxes" are those  property
 6        taxes  on  the  property which are delinquent pursuant to
 7        Section 21-15, 21-20, or 21-25 of the Property Tax  Code,
 8        including  those  delinquent  taxes on property forfeited
 9        under Section 21-225 of the Property Tax Code, as of  the
10        date of loss.
11             In  determining delinquent property taxes under this
12        Section,  the  amount  of  property  taxes  for  which  a
13        certificate of error has been issued pursuant to  Section
14        14-10  or  14-20  of  the  Property Tax Code shall not be
15        considered delinquent.
16             (5)  "Incurred demolition expense" is:  a. the  cost
17        of  demolishing  or removing a structure from property by
18        or at the expense of a unit of local  government  if  the
19        demolition  or  removal  occurs  on  a date preceding the
20        later of (i) the acceptance by the insurance company of a
21        Proof of Loss for an agreed amount of proceeds, or   (ii)
22        the  date of receipt by the unit of local government of a
23        request for execution of the certificate required by this
24        Section; or b. the amount estimated by the unit of  local
25        government  when  it  receives  a  request to execute the
26        certificate required by this Section; or  c.  the  amount
27        ordered  to be withheld by a court within 28 days after a
28        unit of local government receives a request for execution
29        of the certificate required by this Section.  The unit of
30        local government must be a party to such proceeding.
31             Incurred  demolition  expense  shall  be  determined
32        under subparagraph a. whenever possible.  In  determining
33        the  incurred  demolition  expense under subparagraph b.,
34        the unit of local government shall make its estimate  and
HB0496 Engrossed            -3-                LRB9101701JSpc
 1        execute  the certificate within 30 days after receiving a
 2        request for execution. If the unit  of  local  government
 3        shall  fail within 30 days to execute the certificate, as
 4        required by subparagraph a., the company can  proceed  to
 5        make  payment of the claim as if the certificate had been
 6        received showing no unpaid demolition costs. The  request
 7        for execution may be served personally, and may be proven
 8        by  a  written receipt signed by the local official as of
 9        the date the request was made or by service on the  local
10        official  by  certified mail, return receipt requested. A
11        court order under  subparagraph  c.  shall  supersede  an
12        estimate under subparagraph b.
13             (6)  "Property" is the lot on which the structure is
14        located.
15             (7)  "Structure" is a building.
16             (8)  "Claim" is the demand by an insured for payment
17        under an insurance policy or policies.
18             (9)  "Proof  of  Loss"  is  the document on which an
19        insured formally  presents  his  claim  to  an  insurance
20        company.
21             (10)  "Certificate"  is the executed form prescribed
22        by the Director of Insurance.
23             (11)  "Executed" means  signed  by  the  appropriate
24        official or unit of government.
25             (12)  "Cost  of securing property" means the cost by
26        or at the expense of a unit of local government  required
27        to  modify the property to prevent unauthorized access to
28        the property and to  prevent  additional  damage  to  the
29        property from exposure to the elements.
30        (c)  For  any  claim to which this Section is applicable,
31    an insured property owner must submit one of the following to
32    the insurance company:
33             (1)  a certificate that with respect to the property
34        there are:
HB0496 Engrossed            -4-                LRB9101701JSpc
 1                  a.  no delinquent property taxes, and
 2                  b.  no unpaid incurred demolition expenses, and
 3             ;
 4                  c.  no unpaid costs of securing the property;
 5             (2)  a certificate setting forth with respect to the
 6        property:
 7                  a.  the amount of  unpaid  delinquent  property
 8             taxes,
 9                  b.  the  amount  of  unpaid incurred demolition
10             expense or unpaid costs of  securing  the  property,
11             and
12                  c.  a  direction by the owner of the an insured
13             property owner to the insurance company to  pay  the
14             unpaid delinquent property taxes and unpaid incurred
15             demolition  expenses or unpaid costs of securing the
16             property.
17        (d) (1)  Except as provided  in  paragraph  (2)  of  this
18        subsection (d), if a certificate is submitted pursuant to
19        paragraph  (2)  of  subsection  (c)  of this Section, the
20        insurance  company  shall  pay  the   unpaid   delinquent
21        property  taxes and unpaid incurred demolition expense or
22        unpaid costs of securing the property from  the  proceeds
23        payable  by  issuing   a  draft  or  check payable to the
24        appropriate tax collector or unit of local government.
25             Any proceeds remaining shall be paid to the  insured
26        property owner.
27             (2)  In  the  event  incurred  demolition expense is
28        determined  by  estimation   under   paragraph   (5)   of
29        subsection   (b)  of  this  Section  in  cities  of  over
30        2,000,000, the insurance company shall  hold  the  amount
31        estimated  until  an  amended certificate executed by the
32        appropriate  local  government  official   is   submitted
33        stating  (i)  that no demolition expense will be incurred
34        or (ii) the actual unpaid  incurred  demolition  expense.
HB0496 Engrossed            -5-                LRB9101701JSpc
 1        The  insurance  company shall then issue a draft or check
 2        payable to the unit of local government  for  the  actual
 3        unpaid   incurred   demolition  expense.    Any  proceeds
 4        remaining shall be paid to the insured property owner.
 5             In determining  the  amount  of  proceeds  remaining
 6        under  this  paragraph,  the insured property owner shall
 7        receive interest on the amount withheld from the date the
 8        certificate is executed as provided in Section 2  of  the
 9        Interest Act.
10        (e)  If,  under  this  Section,  the proceeds payable are
11    less than the amount of the unpaid delinquent property  taxes
12    and  unpaid  incurred  demolition  expense or unpaid costs of
13    securing the property, unpaid property taxes  shall  be  paid
14    first.
15        (f)  If  incurred demolition expense withheld pursuant to
16    subparagraphs b. or c. of paragraph 5 of  subsection  (b)  of
17    this  Section  exceeds  the  ultimate cost of demolition, the
18    excess shall first be applied to unpaid  delinquent  property
19    taxes.  Any amount of proceeds remaining shall be paid to the
20    insured property owner.
21        (g)  Nothing in this Section shall be construed as:
22             (1)  making  an  insurance  company  liable  for any
23        amount in  excess  of  the  proceeds  payable  under  its
24        insurance  policy unless the insurance company shall have
25        made payment to the named insured without satisfying  the
26        requirements of this Section;
27             (2)  making  a  unit  of  local  government  or  tax
28        collector an insured under an insurance policy; or
29             (3)  creating an obligation for an insurance company
30        to  pay  unpaid  delinquent  property  taxes,  or  unpaid
31        incurred  demolition expense, or unpaid costs of securing
32        property other than as provided in subsection (d) of this
33        Section.
34        (h)  An insurance company making a  payment  of  proceeds
HB0496 Engrossed            -6-                LRB9101701JSpc
 1    under  this  Section  for  unpaid delinquent taxes, or unpaid
 2    incurred demolition expense,  or  unpaid  costs  of  securing
 3    property  shall  be  entitled  to  the  full  benefit of such
 4    payment, including subrogation rights  and  other  rights  of
 5    assignment.
 6        (i)  Unpaid   property   taxes,   and   unpaid   incurred
 7    demolition expense, and unpaid costs of securing property for
 8    a  claim for loss to a structure occurring after the issuance
 9    of a tax deed pursuant to Section 22-40 of the  Property  Tax
10    Code  shall  not  include  any unpaid property tax, or unpaid
11    demolition expense, and unpaid  costs  of  securing  property
12    arising before the issuance of the tax deed.
13        (j)  The  county  collector  shall  be  designated as the
14    local official who shall execute the certificate required  by
15    this   Section  regarding  delinquent  property  taxes.   The
16    village clerk or city clerk in  incorporated  areas  and  the
17    official  in  charge  of  the  county  building department in
18    unincorporated  areas  shall  be  designated  as  the   local
19    official  who  shall execute the certificate required by this
20    Section regarding demolition expenses and costs  of  securing
21    property.
22        (k)  A  fee  not to exceed $5 may be charged by a unit of
23    local government for execution of the certificate required by
24    this Section.
25        (l)  This Section shall retroactively apply to any policy
26    issued or renewed on or after January 1,  1978  for  which  a
27    claim  subject  to  this  Section  remains  unpaid  as of the
28    effective date of this amendatory Act of 1978.
29    (Source: P.A. 87-507;  88-667,  eff.  9-16-94;  88-670,  eff.
30    12-2-94.)

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