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 where the
amount recoverable for the loss or damage to the building or other structure
under all policies is in excess of 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.
(K.S.A. 40-3901 et seq.; Code
2025)
The governing body of
the city hereby creates a lien in favor of the city on the proceeds of any
insurance policy based upon a covered claim payment made for damage or loss to
a building or other structure located within the city where the amount
recoverable for all the loss or damage to the building or other structure under
all policies is in excess of 75 percent of the face value of the policy(s)
covering such building or other insured structure. The lien arises upon any
unpaid tax, special ad valorem levy, or any other charge imposed upon real
property by or on behalf of the city which is an encumbrance on real property,
whether or not evidenced by written instrument, or such tax, levy, assessment,
expense or other charge that has remained undischarged for at least one year
prior to the filing of a proof of loss.
(Code 2025)
Prior to final
settlement on any claim covered by section 8-702, the insurer or insurers shall
contact the county treasurer, Butler County, Kansas, to determine whether any
such encumbrances are presently in existence. If the same are found to exist,
the insurer or insurers shall execute and transmit in an amount equal to that
owing under the encumbrances a draft payable to the county treasurer, Butler
County, Kansas.
(Code 2025)
Such transfer of
proceeds shall be on a pro rata basis by all insurance companies insuring the
building or other structure.
(Code 2025)
(a) When final settlement on a covered claim has
been agreed to or arrived at between the named insured or insureds and the
company or companies, and the final settlement exceeds 75 percent of the face
value of the policy covering any building or other insured structure, and when
all amounts due 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 or companies shall execute
a draft payable to the city treasurer in an amount equal to the sum of 15
percent of the covered claim payment, unless the chief building inspector of
the city has issued a certificate to the insurance company or companies that
the insured has removed the damaged building or other structure, as well as all
associated debris, or repaired, 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), the insurance company shall provide the city with the name and
address of the named insured or insureds, 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 or companies
and the insured or insureds, whereupon the chief building inspector shall
contact the named insured or insureds by certified mail, return receipt
requested, notifying them that said insurance proceeds have been received by
the city and apprise them of the procedures to be followed under this article.
(Code 2025)
The city treasurer is
hereby authorized and shall create a fund to be known as the “Insurance
Proceeds Fund.” All moneys received by the city treasurer as provided for by
this article shall be placed in said fund and deposited in an interest-bearing
account.
(Code 2025)
(a) Upon receipt of moneys as provided for by
this article, the city treasurer shall immediately notify the chief building
inspector of said receipt, and transmit all documentation received from the
insurance company or companies to the chief building inspector.
(b) Within 30 days of the receipt of said moneys,
the chief building inspector 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 30 days
established by subsection (b), the chief building inspector shall notify the
city treasurer whether he or she intends to initiate proceedings under K.S.A.
12-1750 et seq., as amended.
(d) If the chief building inspector has
determined that proceedings under K.S.A. 12-1750 et seq., as amended shall be
initiated, he or she will do so immediately but no later than 45 days after
receipt of the moneys by the city treasurer.
(e) Upon notification to the city treasurer by
the chief building inspector that no proceedings shall be initiated under
K.S.A. 12-1750 et seq., as amended, the city treasurer shall return all such
moneys received, plus accrued interest, to the insured or insureds as
identified in the communication from the insurance company or companies. Such
return shall be accomplished within 45 days of the receipt of the moneys from
the insurance company or companies.
(Code 2025)
If the chief building
inspector has proceeded under the provisions of K.S.A. 12-1750 et seq., as
amended, all moneys in excess of that which is ultimately necessary to comply
with the provisions for the removal of the building or structure, less salvage value,
if any, shall be paid to the insured.
(Code 2025)
If the chief building
inspector, with regard to a building or other structure, determines that it is
necessary to act under K.S.A. 12-1756, any proceeds received by the city
treasurer under the authority of section 8-705(a) relating to that building or
other structure shall be used to reimburse the city for any expenses incurred
by the city in proceeding under K.S.A. 12-1756. Upon reimbursement from the
insurance proceeds, the chief building inspector shall immediately effect the
release of the lien resulting therefrom. Should the expenses incurred by the
city exceed the insurance proceeds paid over to the city treasurer under section
8-705(a), the chief building inspector shall publish a new lien as authorized
by K.S.A. 12-1756, in an amount equal to such excess expenses incurred.
(Code 2025)
This article shall not
make the city a party 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.
(Code 2025)
Insurers complying
with this article or attempting in good faith to comply with this article shall
be immune from civil and 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.
(Code 2025)