State of Illinois
90th General Assembly
Legislation

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[ Engrossed ]

90_HB1232

      215 ILCS 5/397.1          from Ch. 73, par. 1009.1
          Amends the Illinois Insurance Code concerning payment  of
      claims  for  damage to structures. Provides that an insurance
      company must be certain that  costs  of  securing  a  damaged
      structure are paid before paying a claim to the insured.
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                                               LRB9004889JScc
 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 expense
26        required to modify the property to  prevent  unauthorized
27        access  to  the property and to prevent additional damage
28        to the property from exposure to the elements.
29        (c)  For any claim to which this Section  is  applicable,
30    an insured property owner must submit one of the following to
31    the insurance company:
32             (1)  a certificate that with respect to the property
33        there are:
34                  a.  no delinquent property taxes, and
                            -4-                LRB9004889JScc
 1                  b.  no  unpaid  incurred  demolition  expenses,
 2             and;
 3                  c.  no unpaid costs of securing the property;
 4             (2)  a certificate setting forth with respect to the
 5        property:
 6                  a.  the  amount  of  unpaid delinquent property
 7             taxes,
 8                  b.  the amount of  unpaid  incurred  demolition
 9             expense  or  unpaid  costs of securing the property,
10             and
11                  c.  a direction by the owner of the an  insured
12             property  owner  to the insurance company to pay the
13             unpaid delinquent property taxes and unpaid incurred
14             demolition expenses or unpaid costs of securing  the
15             property.
16        (d) (1)  Except  as  provided  in  paragraph  (2) of this
17        subsection (d), if a certificate is submitted pursuant to
18        paragraph (2) of subsection  (c)  of  this  Section,  the
19        insurance   company   shall  pay  the  unpaid  delinquent
20        property taxes and unpaid incurred demolition expense  or
21        unpaid  costs  of securing the property from the proceeds
22        payable by issuing  a  draft  or  check  payable  to  the
23        appropriate tax collector or unit of local government.
24             Any  proceeds remaining shall be paid to the insured
25        property owner.
26             (2)  In the event  incurred  demolition  expense  is
27        determined   by   estimation   under   paragraph  (5)  of
28        subsection  (b)  of  this  Section  in  cities  of   over
29        2,000,000,  the  insurance  company shall hold the amount
30        estimated until an amended certificate  executed  by  the
31        appropriate   local   government  official  is  submitted
32        stating (i) that no demolition expense will  be  incurred
33        or  (ii)  the  actual unpaid incurred demolition expense.
34        The insurance company shall then issue a draft  or  check
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 1        payable  to  the  unit of local government for the actual
 2        unpaid  incurred  demolition  expense.     Any   proceeds
 3        remaining shall be paid to the insured property owner.
 4             In  determining  the  amount  of  proceeds remaining
 5        under this paragraph, the insured  property  owner  shall
 6        receive interest on the amount withheld from the date the
 7        certificate  is  executed as provided in Section 2 of the
 8        Interest Act.
 9        (e)  If, under this Section,  the  proceeds  payable  are
10    less  than the amount of the unpaid delinquent property taxes
11    and unpaid incurred demolition expense  or  unpaid  costs  of
12    securing  the  property,  unpaid property taxes shall be paid
13    first.
14        (f)  If incurred demolition expense withheld pursuant  to
15    subparagraphs  b.  or  c. of paragraph 5 of subsection (b) of
16    this Section exceeds the ultimate  cost  of  demolition,  the
17    excess  shall  first be applied to unpaid delinquent property
18    taxes.  Any amount of proceeds remaining shall be paid to the
19    insured property owner.
20        (g)  Nothing in this Section shall be construed as:
21             (1)  making an  insurance  company  liable  for  any
22        amount  in  excess  of  the  proceeds  payable  under its
23        insurance policy unless the insurance company shall  have
24        made  payment to the named insured without satisfying the
25        requirements of this Section;
26             (2)  making  a  unit  of  local  government  or  tax
27        collector an insured under an insurance policy; or
28             (3)  creating an obligation for an insurance company
29        to  pay  unpaid  delinquent  property  taxes,  or  unpaid
30        incurred demolition expense, or unpaid costs of  securing
31        property other than as provided in subsection (d) of this
32        Section.
33        (h)  An  insurance  company  making a payment of proceeds
34    under this Section for unpaid  delinquent  taxes,  or  unpaid
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 1    incurred  demolition  expense,  or  unpaid  costs of securing
 2    property shall be  entitled  to  the  full  benefit  of  such
 3    payment,  including  subrogation  rights  and other rights of
 4    assignment.
 5        (i)  Unpaid   property   taxes,   and   unpaid   incurred
 6    demolition expense, and unpaid costs of securing property for
 7    a claim for loss to a structure occurring after the  issuance
 8    of  a  tax deed pursuant to Section 22-40 of the Property Tax
 9    Code shall not include any unpaid  property  tax,  or  unpaid
10    demolition  expense,  and  unpaid  costs of securing property
11    arising before the issuance of the tax deed.
12        (j)  The county collector  shall  be  designated  as  the
13    local  official who shall execute the certificate required by
14    this  Section  regarding  delinquent  property  taxes.    The
15    village  clerk  or  city  clerk in incorporated areas and the
16    official in charge  of  the  county  building  department  in
17    unincorporated   areas  shall  be  designated  as  the  local
18    official who shall execute the certificate required  by  this
19    Section  regarding  demolition expenses and costs of securing
20    property.
21        (k)  A fee not to exceed $5 may be charged by a  unit  of
22    local government for execution of the certificate required by
23    this Section.
24        (l)  This Section shall retroactively apply to any policy
25    issued  or  renewed  on  or after January 1, 1978 for which a
26    claim subject to  this  Section  remains  unpaid  as  of  the
27    effective date of this amendatory Act of 1978.
28    (Source:  P.A.  87-507;  88-667,  eff.  9-16-94; 88-670, eff.
29    12-2-94.)

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