An Act amending the act of May 17, 1921 (P.L.682, No.284), known as The Insurance Company Law of 1921, in fire and marine insurance, further providing for municipal certificate required prior to payment of fire loss claims.

PRINTER'S NO. 869
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 794
Session of
2025
INTRODUCED BY ARGALL, STEFANO AND MALONE, JUNE 3, 2025
REFERRED TO BANKING AND INSURANCE, JUNE 3, 2025
AN ACT
Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
act relating to insurance; amending, revising, and
consolidating the law providing for the incorporation of
insurance companies, and the regulation, supervision, and
protection of home and foreign insurance companies, Lloyds
associations, reciprocal and inter-insurance exchanges, and
fire insurance rating bureaus, and the regulation and
supervision of insurance carried by such companies,
associations, and exchanges, including insurance carried by
the State Workmen's Insurance Fund; providing penalties; and
repealing existing laws," in fire and marine insurance,
further providing for municipal certificate required prior to
payment of fire loss claims.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 508(a) and (c) of the act of May 17, 1921
(P.L.682, No.284), known as The Insurance Company Law of 1921,
are amended and the section is amended by adding subsections to
read:
Section 508. Municipal Certificate Required Prior to Payment
of Fire Loss Claims.--(a) No insurance company, association or
exchange doing business in this Commonwealth shall pay a claim
of a named insured for fire damage to a structure located within
a municipality where the amount recoverable for the fire loss to
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the structure under all policies exceeds [seven thousand five
hundred dollars ($7,500)] eighteen thousand dollars ($18,000)
unless the insurance company, association or exchange is
furnished with a certificate pursuant to subsection (b) of this
section and unless there is compliance with the procedures set
forth in subsections (c) and (d) of this section.
* * *
(c) When the loss agreed to between the named insured and
the company, association or exchange equals or exceeds sixty per
centum (60%) of the aggregate limits of liability on all fire
policies covering the building or other structure, the insurance
company, association or exchange shall transfer from the
insurance proceeds to the designated officer of the municipality
in the aggregate [two thousand dollars ($2,000)] four thousand
dollars ($4,000) for each fifteen thousand dollars ($15,000) and
each fraction of that amount of a claim, or, if at the time of a
loss report the named insured has submitted a contractor's
signed estimate of the costs of removing, repairing or securing
the building or other structure in an amount less than the
amount calculated under the foregoing transfer formula, the
insurance company, association or exchange shall transfer from
the insurance proceeds the amount specified in the estimate. The
transfer of proceeds shall be on a pro rata basis by all
companies, associations or exchanges insuring the building or
other structure. Policy proceeds remaining after the transfer to
the municipality shall be disbursed in accordance with the
policy terms. The named insured may submit a contractor's signed
estimate of the costs of removing, repairing or securing the
building or other structure after the transfer, and the
designated officer shall return the amount of the fund in excess
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of the estimate to the named insured if the municipality has not
commenced to remove, repair or secure the building or other
structure. This subsection only applies to municipalities that
have adopted an ordinance authorizing the procedure described in
subsections (c) and (d) of this section and applies only to fire
losses that occur after the adoption of the ordinance. The
ordinance shall designate the officer authorized to carry out
the duties of this section.
(c.1) A policyholder shall, within one year of receiving
funds under this section, report to the governing board of the
municipality how the funds are being utilized and a timeline for
action on the remaining funds. The report under this subsection
shall include all supporting documents detailing the precise
spending of funds for the purpose for which the claim was made.
The following shall apply:
(1) Following the issuance of the report of the
policyholder to the governing board, the governing board
shall, pending a majority vote of members present in
accordance to quorum guidelines, approve the timeline for the
execution of remaining funds. If the governing board does not
approve the timeline, the policyholder must establish a new
timeline for the execution of remaining funds pending
approval from the governing board.
(2) If the timeline for the execution of remaining funds
by the policyholder is not met, the governing board may,
pending a majority vote of members present in accordance to
quorum guidelines, approve a new timeline as proposed by the
policyholder or may confiscate the funds to be deposited into
a special fund used solely for the purpose of financing the
original purpose of the claim.
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(3) If after one year the policyholder fails to report
to the governing board of the municipality the progress that
has been made with funds allocated to the policyholder, the
municipality shall, pending a majority vote of members
present in accordance to quorum guidelines, confiscate the
funds to be deposited into a special fund used solely for the
purpose of financing the original purpose of the claim.
(c.2) For all existing funds held by a current policyholder,
the requirements of subsection (c.1)(1) and (2) shall apply.
* * *
(d.1) If a municipality does not have an auditor or if the
municipal auditor has a conflict of interest in auditing escrow
funds, the responsibility for auditing funds under this section
shall be the responsibility of the respective county auditor.
* * *
Section 2. This act shall take effect in 60 days.
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