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91_HB0496eng
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
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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
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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:
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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
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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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