87-9220 Fire Insurance Proceeds(Published in The Salina Journal October 30, 1987)
ORDINANCE NUMBER 87-9220
AN ORDINANCE AMENDING CHAPTER 8 OF THE SALINA CODE BY
ADDING ARTICLE XVI RELATING TO STRUCTURES DAMAGED BY FIRE OR
EXPLOSION, PROVIDING FOR PAYMENT OF A PORTION OF INSURANCE
PROCEEDS WITH RELATION TO SAID STRUCTURE TO THE CITY, PROVIDING
FOR THE DISBURSEMENT OF SAID INSURANCE PROCEEDS AND CREATING A
FIRE INSURANCE PROCEEDS FUND.
Kansas:
BE IT ORDAINED by the Governing Body of the City of Salina,
Section 1. That Chapter 8 of the Salina Code is hereby amended by
adding Article XVI, which shall read as follows:
"Chapter 8
Article XVI
Structures damaged by fire or explosion
"Section 8-500. Authorization.
The city is hereby authorized to utilize the procedures
established by K. S. A. 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 (75) percent 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
Article.
(c) 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 insurance coverage applicable to said
building or other structure, and the amount of the final
settlement agreed to or arrived at between the insurance
company and the insured whereupon the chief building
official shall contact the named insured by registered mail,
notifying them that the insurance proceeds have been
"Section 8-501. Procedure.
(a) When final settlement on a covered claim has been
agreed to or arrived at between the named insured and the
company and final settlement exceeds seventy-five (75)
percent of the face value of the policy covering any building
or other insured structure, and when all amounts due to 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) or ten (10) percent of the covered claim payment,
whichever is less, unless the chief building official of the
city 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 replaced,
rebuilt, or otherwise made the premises safe and secure.
(b) 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) 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 insurance coverage applicable to said
building or other structure, and the amount of the final
settlement agreed to or arrived at between the insurance
company and the insured whereupon the chief building
official shall contact the named insured by registered mail,
notifying them that the insurance proceeds have been
received by the city and apprise them of the procedures to
be followed under this Article.
"Section 8-502. Fund created; deposit of moneys.
The director of finance is hereby directed to
create a fund to be known as the "Fire Insurance Proceeds
Fund." All moneys received by the city treasurer as
provided for by this Article shall be placed in that fund and
deposited in an interest-bearing account.
"Section 8-503. Building inspector; investigation,
removal of structure.
(a) Upon receipt of moneys as provided for by this Article,
the director of finance shall immediately notify the chief
building official of the receipt, and transmit all
documentation received from the insurance company to the
chief building official.
(b) Within twenty (20) days of the receipt of the moneys,
the chief building official shall determine, after prior
investigation, whether the city shall instigate proceedings
under the provisions of K.S.A. 12-1750 et seq., as
amended.
(c) Prior to the expiration of the twenty (20) days
established by subsection (b) of this section, the chief
building official shall notify the director of finance whether
he or she intends to initiate proceedings under K.S.A.
12-1750 et seq., as amended.
(d) If the chief
proceedings under
shall be initiated,
longer than thirty
the city treasurer.
building official has determined that
K.S.A. 12-1750 et seq., as amended,
he or she will do so immediately but no
(30) days after receipt of the moneys by
(e) Upon notification to the director of finance by the chief
building official that no proceedings shall be initiated under
K.S.A. 12-1750 et seq., as amended, the director of finance
shall pay all such moneys received, plus accrued interest, to
the insured as identified in the communication from the
insurance company.
"Section 8-504. Removal of structure.
"Section 8-505. Relation to insurance policies.
This Article shall not make the city a part to any
insurance contract, nor is the insurer liable to any party for
any amount in excess of the proceeds otherwise payable
under its insurance policy.
If the chief building official, determines that it is
necessary to act under K.S.A. 12-1750 et seq. with regard
to a building or other structure damaged by fire or
explosion any proceeds received by the city treasurer under
the authority of section C -501(a) relating to that building or
other structure shall be used to reimburse the city for any
expenses incurred by the city in repairing or removing the
building or other structure. All moneys in excess of that
which is ultimately necessary to comply with the provisions
for the repair of the building or structure, less salvage
value, if any, shall be paid to the insured. Should the
expenses incurred by the city exceed the insurance proceeds
paid to the city treasurer under Section 8-501(a) the excess
expenses incurred shall be assessed against the property
and paid and collected in the manner provided by K.S.A.
12-1755, as amended.
"Section 8-505. Relation to insurance policies.
This Article shall not make the city a part to any
insurance contract, nor is the insurer liable to any party for
any amount in excess of the proceeds otherwise payable
under its insurance policy.
1
1
"Section 8-506. Insurers; liability.
Insurers complying with this Article or attempting
in good faith to comply with this Article shall he immune
from civil or criminal liability and such action shall not be
deemed in violation of K.S.A. 40-2404 and any amendments
thereto, including withholding payment of any insurance
proceeds pursuant to this Article, or releasing or disclosing
any information pursuant to this Article.
"Section 8-507. Regulations authorized.
The city manager is hereby authorized to
promulgate any further regulations necessary to implement
the provisions of this Article."
Section 2. Pursuant to K.S.A. 40-3905 the City Clerk is hereby
authorized and directed to send a copy of this ordinance to the Commissioner of
Insurance of the State of Kansas within fourteen (14) days after its adoption.
Section 3. This ordinance shall be in full force and effect from and
after its adoption and publication once in the official city newspaper.
[SEAL]
ATTEST:
Robert K. Biles, City Clerk
Introduced: October 19, 1987
Passed: October 26, 1987
Stephen C. Ryan, Mayor