COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 224
(By Senators Tomblin (Mr. President) and Caruth,
By Request of the Executive)
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[Originating in the Committee on Banking and Insurance;
reported February 17, 2010.]
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A BILL to repeal §33-17-9a of the Code of West Virginia, 1931, as
amended; to amend said code by adding thereto a new section,
designated §33-12C-6a; to amend and reenact §33-17-9b of said
code; and to amend said code by adding thereto a new article,
designated §38-10E-1 and §38-10E-2, all relating to imposing
a statutory lien on fire insurance proceeds in the event of a
total loss to real property; requiring insurance companies to
notify the insured and the municipality or county after
determining that a claim involves a total loss to real
property; defining terms; requiring a municipality or county
to perfect the lien within thirty days of notice of a total
loss determination; providing a "Notice of Lien for Debris
Removal" form; providing for release of the lien upon
satisfaction of certain conditions; and authorizing the
Insurance Commissioner to declare surplus lines insurers ineligible for certain violations.
Be it enacted by the Legislature of West Virginia:
That §33-17-9a of the Code of West Virginia, 1931, as amended,
be repealed; that said code be amended by adding thereto a new
section, designated §33-12C-6a; that §33-17-9b of said code be
amended and reenacted; and that said code be amended by adding
thereto a new article, designated §38-10E-1 and §38-10E-2, all to
read as follows:
CHAPTER 33. INSURANCE.
ARTICLE 12. SURPLUS LINE.
§33-12C-6a. Debris removal liens; noncompliance; penalties.
The commissioner may declare a surplus lines insurer
ineligible for any violation of the provisions of article ten-e,
chapter thirty-eight of this code.
ARTICLE 17. FIRE AND MARINE INSURANCE.
§33-17-9b. Claims for total loss; debris removal proceeds.
(a) No proceeds shall be paid by an insurance company
which
that has issued a policy which provides coverage for debris
removal for cleanup, removal of refuse, debris, remnants, or
remains of a dwelling or structure upon a claim of total loss
unless and until the insurance company receives certification that
the refuse, debris, remnants, or remains of the dwelling or
structure have been cleaned up, removed or otherwise disposed
of. In the event the insurance company receives, within six months
of the date of loss, certification that such cleanup, removal or
disposal costs have been incurred by a municipality, county or other governmental entity, rather than the policyholder, the
debris removal and cleanup proceeds shall be paid to the
municipality, county or other government entity which has incurred
such costs:
Provided, That any company that has issued a policy
that provides coverage for damage to real property as a result of
fire or explosion, regardless of whether such policy includes
coverage for debris removal, shall comply with the provisions of
section one, article ten-e, chapter thirty-eight of this code.
No insurance company subject to this section which complies
with this section may be held liable for any claim that may arise
out of the cleanup, removal or disposal of debris pursuant to this
section.
(b) An insurance company subject to this section
which that
complies with this section
and with section one, article ten-e,
chapter thirty-eight of this code shall be deemed to have fully
satisfied all contractual obligations to the policyholder
regarding debris removal. No insurance company shall be required
to pay moneys in excess of policy limits
for debris removal.
(c) Compliance with this section and section one, article
ten-e, chapter thirty-eight of this code may not be deemed a
violation of section nine of this article.
CHAPTER 38. LIENS.
ARTICLE 10E. LIEN ON INSURANCE PROCEEDS FOR DEBRIS REMOVAL.
§38-10E-1. Debris removal; notice of insurance proceeds; lien of
municipality or county.
(a)(1) Notwithstanding any provision of this code to the contrary, the receipt by an insurance company of a covered claim
under a fire insurance policy for a total loss to real property
creates a statutory lien on the insurance proceeds payable for the
claim in favor of the municipality in which the property is
situate or, if the property is located outside a municipality, in
favor of the county in which the property is situate, in an amount
equal to the greater of: (A) $5,000; or (B) ten percent of the
policy limits for loss to the real property, including any
coverage for debris removal:
Provided, That the amount of the lien
may not exceed the policy limits of coverage for the real property
plus debris removal, if any:
Provided, however, That the lien
created by this subsection does not apply to proceeds payable
under the policy for any losses other than those to the real
property insured, including loss of personal property and payments
for temporary housing and related living expenses.
(2) The terms "municipality" and "treasurer" have the same
meanings ascribed to them in section two, article one, chapter
eight of this code.
(b) Within ten days of a determination by the insurer that a
covered claim constitutes a total loss, the insurance company
shall send certified letters to the insured and, as applicable, to
the treasurer of the municipality in which the property is situate
or, if the property is situate outside a municipality, to the
sheriff of the county in which the property is situate, stating
any amount claimed; the limits and conditions of coverage; the
location of the property; the terms and limits of coverage designated by the insurance policy for securing cleanup and
removal, if any; any time limitations imposed on the insured for
securing cleanup and removal; and the policyholder's name and
mailing address.
(c)(1) The lien created pursuant to subsection (a) of this
section shall be discharged unless the municipality or county,
whichever is applicable, within thirty days of the receipt of the
letter sent in accordance with subsection (b) of this section,
perfects and preserves the lien by filing a notice thereof with
the clerk of the county commission of the county in which the
property is situate:
Provided, That upon filing of a notice of
lien in accordance with this subdivision, the amount of the lien
created in subsection (a) shall thereafter be for the estimated
cost of cleanup contained in such notice of lien:
Provided,
however, That the discharge of a lien based upon the
municipality's or county's failure to file a notice pursuant to
this subdivision does not affect any other remedy the municipality
or county may have with respect to the property or the liability
of the property owner.
(2) A notice of lien filed in accordance with this subsection
shall include a statement of the estimated cost to the
municipality or county for the cleanup of the damaged property,
removal of any refuse, debris, remnants or remains of the building
and appurtenances and securing the structure:
Provided, That the
estimated cost may not exceed the amount of the lien created
pursuant to subsection (a) of this section.
(3) A notice of lien filed in accordance with this section
shall be notarized and shall be sufficient if it is in the form
and effect as follows:
Notice of Lien for Debris Removal
To (name of insurance company):
You will please take notice that the undersigned, on behalf
of the (municipality or county) (of County, if a municipality),
West Virginia, has estimated that the cost of removing debris and
otherwise cleaning up (a certain building, other structure or
improvement) on real estate known as (an adequate and
ascertainable description of the real estate) would be (estimated
cleanup cost).
You are further notified that, in order to secure the payment
of such sum, the undersigned, on behalf of the (municipality or
county) and pursuant to the provisions of section one, article
ten-e, chapter thirty-eight of the West Virginia Code, claims a
lien in the aforesaid amount upon the interest of (policyholder's
name) in a fire insurance policy (the policy number or other
identifying information) issued by (the insurance company's name
and address).
(Signature of treasurer or municipal officer exercising the power
and authority commonly exercised by a treasurer or sheriff)
(Title)
(d) The clerk of the county commission shall, upon the filing
of the notice, index the same in a book in his or her office
called "Debris Removal Liens" as a lien against the insurance proceeds in favor of the municipality or county and shall send a
copy of such notice to the insurer.
§38-10E-2. Release of lien.
(a) A lien recorded in accordance with section one of this
article shall be released if the municipality or county determines
that the property has been satisfactorily cleaned up or repaired,
the city or county determines that satisfactory measures have been
taken to assure that the property will be repaired or cleaned up
within a reasonable time, or the insurance company has paid the
amount of the lien to the municipality or county or the person
designated to receive the moneys.
Provided, That if the
insurer has paid the amount of the lien to the treasurer or
sheriff and the subsequent cost of cleanup is less than that
amount, the difference shall be returned to the insurer.
(b) Upon the satisfaction of a lien in accordance with
subsection (a) of this section, the treasurer or sheriff,
whichever is applicable, shall sign a release and cause it to be
recorded by the clerk of the county commission in the "Debris
Removal Liens" book and, immediately upon recordation, he or she
shall send a certified copy thereof to the insurance
company: Provided, That if a lien has been paid or otherwise
satisfied and the treasurer or sheriff refuses to cause the lien
to be released, the insurance company or policyholder may apply to
the circuit court for an order compelling the clerk to record a
release.
NOTE: The purpose of this bill is to establish a statutory
lien on insurance proceeds for total loss to real property in
favor of a municipality or county and require that such proceeds
be made available for the cleanup of the property.
§33-12C-6a, §38-10E-1 and §38-10E-2 are new; therefore,
strike-throughs and underscoring have been omitted.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that
would be added.