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92_HB1967
LRB9207367JSpc
1 AN ACT concerning insurance.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Insurance Code is amended by
5 changing Section 397.1 as follows:
6 (215 ILCS 5/397.1) (from Ch. 73, par. 1009.1)
7 Sec. 397.1. Certificate regarding payment of taxes and
8 expenses on property sustaining loss.
9 (a) It shall be unlawful for any company transacting
10 insurance business in this State to pay a claim of an insured
11 property owner for loss by fire or explosion to a structure
12 located in this State where the amount recoverable for loss
13 to the structure under a policy exceeds $25,000, until the
14 insurance company receives the certificate required by this
15 Section. A notice, to the State's Attorney of the county
16 where the structure is located, of the insurers intent to pay
17 a claim shall include the name of the property owner, the
18 address of the property, its legal description, the permanent
19 real estate index number that identifies the property for
20 purposes of taxation, and the amount of the claim to be paid.
21 (b) For purposes of this Section, the following
22 definitions are applicable:
23 (1) "Insured property owner" is a person named as
24 an insured who is the owner, title-holder or mortgagee of
25 a structure, the holder of an interest secured by the
26 structure, the beneficiary of a land trust owning or
27 holding title to a structure, the lessee of a structure
28 with a contractual obligation for property taxes, or the
29 assignee of any such person.
30 (2) "Amount recoverable" is the dollar amount
31 payable under all insurance policies for loss to the
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1 structure.
2 (3) "Proceeds" is the dollar amount payable for
3 loss to the structure under an insurance policy.
4 (4) "Delinquent property taxes" are those property
5 taxes on the property which are delinquent pursuant to
6 Section 21-15, 21-20, or 21-25 of the Property Tax Code,
7 including those delinquent taxes on property forfeited
8 under Section 21-225 of the Property Tax Code, as of the
9 date of loss.
10 In determining delinquent property taxes under this
11 Section, the amount of property taxes for which a
12 certificate of error has been issued pursuant to Section
13 14-10 or 14-20 of the Property Tax Code shall not be
14 considered delinquent.
15 (5) "Incurred demolition expense" is: (A) a. the
16 cost of demolishing or removing a structure from property
17 by or at the expense of a unit of local government if the
18 demolition or removal occurs on a date preceding the
19 later of (i) the acceptance by the insurance company of a
20 Proof of Loss for an agreed amount of proceeds, or (ii)
21 the date of receipt by the unit of local government of a
22 request for execution of the certificate required by this
23 Section; or (B) b. the amount estimated by the unit of
24 local government when it receives a request to execute
25 the certificate required by this Section; or (C) c. the
26 amount ordered to be withheld by a court within 28 days
27 after a unit of local government receives a request for
28 execution of the certificate required by this Section.
29 The unit of local government must be a party to such
30 proceeding.
31 Incurred demolition expense shall be determined
32 under subparagraph (A) a. whenever possible. In
33 determining the incurred demolition expense under
34 subparagraph (B) b., the unit of local government shall
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1 make its estimate and execute the certificate within 30
2 days after receiving a request for execution. If the unit
3 of local government shall fail within 30 days to execute
4 the certificate, as required by subparagraph a., the
5 company can proceed to make payment of the claim as if
6 the certificate had been received showing no unpaid
7 demolition costs. The request for execution may be served
8 personally, and may be proven by a written receipt signed
9 by the local official as of the date the request was made
10 or by service on the local official by certified mail,
11 return receipt requested. A court order under
12 subparagraph (C) c. shall supersede an estimate under
13 subparagraph (B) b.
14 (6) "Property" is the lot on which the structure is
15 located.
16 (7) "Structure" is a building.
17 (8) "Claim" is the demand by an insured for payment
18 under an insurance policy or policies.
19 (9) "Proof of Loss" is the document on which an
20 insured formally presents his claim to an insurance
21 company.
22 (10) "Certificate" is the executed form prescribed
23 by the Director of Insurance.
24 (11) "Executed" means signed by the appropriate
25 official or unit of government.
26 (12) "Cost of securing property" means the expense
27 incurred by a unit of local government required to modify
28 the property to prevent unauthorized access to the
29 property and to prevent additional damage to the property
30 from exposure to the elements.
31 (c) For any claim to which this Section is applicable,
32 an insured property owner must submit one of the following to
33 the insurance company:
34 (1) a certificate that with respect to the property
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1 there are:
2 (A) a. no delinquent property taxes, and
3 (B) b. no unpaid incurred demolition expenses,
4 and;
5 (C) no unpaid costs of securing the property;
6 (2) a certificate setting forth with respect to the
7 property:
8 (A) a. the amount of unpaid delinquent
9 property taxes,
10 (B) b. the amount of unpaid incurred
11 demolition expense or unpaid costs of securing the
12 property, and
13 (C) c. a direction by the owner of the an
14 insured property owner to the insurance company to
15 pay the unpaid delinquent property taxes and unpaid
16 incurred demolition expenses or unpaid costs of
17 securing the property.
18 (d) (1) Except as provided in paragraph (2) of this
19 subsection (d), if a certificate is submitted pursuant to
20 paragraph (2) of subsection (c) of this Section, the
21 insurance company shall pay the unpaid delinquent
22 property taxes and unpaid incurred demolition expense or
23 unpaid costs of securing the property from the proceeds
24 payable by issuing a draft or check payable to the
25 appropriate tax collector or unit of local government.
26 Any proceeds remaining shall be paid to the insured
27 property owner.
28 (2) In the event incurred demolition expense is
29 determined by estimation under paragraph (5) of
30 subsection (b) of this Section in cities of over
31 2,000,000, the insurance company shall hold the amount
32 estimated until an amended certificate executed by the
33 appropriate local government official is submitted
34 stating (i) that no demolition expense will be incurred
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1 or (ii) the actual unpaid incurred demolition expense.
2 The insurance company shall then issue a draft or check
3 payable to the unit of local government for the actual
4 unpaid incurred demolition expense. Any proceeds
5 remaining shall be paid to the insured property owner.
6 In determining the amount of proceeds remaining
7 under this paragraph, the insured property owner shall
8 receive interest on the amount withheld from the date the
9 certificate is executed as provided in Section 2 of the
10 Interest Act.
11 (e) If, under this Section, the proceeds payable are
12 less than the amount of the unpaid delinquent property taxes
13 and unpaid incurred demolition expense or unpaid costs of
14 securing the property, unpaid property taxes shall be paid
15 first.
16 (f) If incurred demolition expense withheld pursuant to
17 subparagraph (B) subparagraphs b. or (C) c. of paragraph 5 of
18 subsection (b) of this Section exceeds the ultimate cost of
19 demolition, the excess shall first be applied to unpaid
20 delinquent property taxes. Any amount of proceeds remaining
21 shall be paid to the insured property owner.
22 (g) Nothing in this Section shall be construed as:
23 (1) making an insurance company liable for any
24 amount in excess of the proceeds payable under its
25 insurance policy unless the insurance company shall have
26 made payment to the named insured without satisfying the
27 requirements of this Section;
28 (2) making a unit of local government or tax
29 collector an insured under an insurance policy; or
30 (3) creating an obligation for an insurance company
31 to pay unpaid delinquent property taxes, or unpaid
32 incurred demolition expense, or unpaid costs of securing
33 property other than as provided in subsection (d) of this
34 Section.
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1 (h) An insurance company making a payment of proceeds
2 under this Section for unpaid delinquent taxes, or unpaid
3 incurred demolition expense, or unpaid costs of securing
4 property shall be entitled to the full benefit of such
5 payment, including subrogation rights and other rights of
6 assignment.
7 (i) Unpaid property taxes, and unpaid incurred
8 demolition expense, and unpaid costs of securing property for
9 a claim for loss to a structure occurring after the issuance
10 of a tax deed pursuant to Section 22-40 of the Property Tax
11 Code shall not include any unpaid property tax, or unpaid
12 demolition expense, and unpaid costs of securing property
13 arising before the issuance of the tax deed.
14 (j) The county collector shall be designated as the
15 local official who shall execute the certificate required by
16 this Section regarding delinquent property taxes. The
17 village clerk or city clerk in incorporated areas and the
18 official in charge of the county building department in
19 unincorporated areas shall be designated as the local
20 official who shall execute the certificate required by this
21 Section regarding demolition expenses and costs of securing
22 property.
23 (k) A fee not to exceed $5 may be charged by a unit of
24 local government for execution of the certificate required by
25 this Section.
26 (l) This Section shall retroactively apply to any policy
27 issued or renewed on or after January 1, 1978 for which a
28 claim subject to this Section remains unpaid as of the
29 effective date of this amendatory Act of 1978.
30 (Source: P.A. 87-507; 88-667, eff. 9-16-94; 88-670, eff.
31 12-2-94.)