Bill Text: MI HB5862 | 2013-2014 | 97th Legislature | Engrossed
Bill Title: Insurance; property and casualty; fire insurance withholding maximum escrow; increase. Amends secs. 102, 2227 & 2845 of 1956 PA 218 (MCL 500.102 et seq.).
Spectrum: Bipartisan Bill
Status: (Passed) 2014-12-31 - Assigned Pa 509'14 With Immediate Effect 2014 Addenda [HB5862 Detail]
Download: Michigan-2013-HB5862-Engrossed.html
HB-5862, As Passed House, December 10, 2014
SUBSTITUTE FOR
HOUSE BILL NO. 5862
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 102, 2227, and 2845 (MCL 500.102, 500.2227,
and 500.2845), section 102 as amended by 2000 PA 252, section 2227
as added by 1998 PA 217, and section 2845 as amended by 1998 PA
216.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 102. As used in this act:
(a)
(1) "Commissioner" as used in this act means
the
commissioner
of the office of financial and insurance
services.director.
(b) (2)
"Department" as used
in this act means the office of
financial
and insurance services.department
of insurance and
financial services.
(c) "Director" means, unless the context clearly implies a
different meaning, the director of the department of insurance and
financial services.
Sec. 2227. (1) If a claim is filed for a loss to insured real
property due to fire, explosion, vandalism, malicious mischief,
wind, hail, riot, or civil commotion and a final settlement is
reached on the loss to the insured real property, an insurer shall
withhold from payment 25% of the actual cash value of the insured
real property at the time of the loss or 25% of the final
settlement,
whichever is less. For Until
December 31, 2014, for
residential property, the 25% settlement or judgment withheld shall
not exceed $6,000.00 adjusted annually beginning June 1, 1999 in
accordance with the consumer price index. Beginning January 1,
2015, for residential property, the 25% settlement or judgment
withheld shall not exceed $12,000.00 adjusted January 1 of each
year
in accordance with the consumer price index. The commissioner
director shall notify annually all insurance companies transacting
property insurance in this state as to the new adjusted amount. At
the time that 25% of the settlement or judgment is withheld, the
insurer shall give notice of the withholding to the treasurer of
the city, village, or township in which the insured real property
is located, to the insured, and to any mortgagee having an existing
lien or liens against the insured real property, if the mortgagee
is
named on the policy. In the case of For a judgment, notice shall
also be provided to the court in which judgment was entered. The
notice
shall must include all of the following:
(a) The identity and address of the insurer.
(b) The name and address or forwarding address of each
policyholder, including any mortgagee.
(c)
Location The location of the insured real property.
(d) The date of loss, policy number, and claim number.
(e) The amount of money withheld.
(f) A statement that the city, village, or township may have
the withheld amount paid into a trust or escrow account established
for the purposes of this section if within 15 days after the
mailing of the notice the city, village, or township states that
the money should be withheld to protect the public health and
safety; otherwise, the withheld amount shall be paid to the insured
15 days after the mailing of the notice.
(g) An explanation of the provisions of this section.
(2)
In order for For a city, village, or township to escrow
the amount withheld by the insurer, and to retain that amount, the
following procedure shall be used:
(a) An authorized representative of the city, village, or
township shall request the insurer to pay the withheld amount into
an escrow account maintained by the treasurer of the city, village,
or township. A final settlement that exceeds 49% of the insurance
on the insured real property is prima facie evidence that the
damaged insured structure violates existing health and safety
standards of the city, village, or township and constitutes cause
for the escrowing of the withheld amount as surety for the repair,
replacement, or removal of the damaged structure.
(b)
In the case of For a settlement, the request under
subdivision (a) shall be sent to the insurer with a copy to the
insured
and any mortgagees. The copy to the insured shall must
contain
the notice required under subdivision (d). Upon On receipt
of the request, the insurer shall forward the withheld amount to
the treasurer of the city, village, or township, and shall provide
notice of the forwarding to the insured and any mortgagees.
(c)
In the case of For a judgment, the request under
subdivision (a) shall be sent to the insurer with a copy to the
insured, any mortgagees, and the court in which judgment was
entered.
The copy to the insured shall must
contain the notice
required
under subdivision (d). Upon the On
motion of the city,
village, or township, the court shall order the withheld amount
transmitted to the treasurer of the city, village, or township.
(d) The city, village, or township shall notify the insured
that the insured has 10 days from the date of the mailing of the
notice to object to the city's, village's, or township's retention
of
the withheld amount. The notice shall must identify the
authorized
representative of the city, village, or township that to
whom
the insured should address his or her
objections to and shall
must state that the insured may do either of the following:
(i) Seek resolution with the representative of the city,
village, or township designated to receive and resolve objections
under this section. The city, village, or township shall make a
final determination and shall notify the insured of that
determination not later than 30 days after receipt of notice that
the insured wishes to seek resolution under this subparagraph. This
final determination shall include notice to the insured that if the
insured is still dissatisfied with the city's, village's, or
township's determination, the insured may seek relief in circuit
court.
(ii) Seek relief in the circuit court.
(3) Upon receipt of money and information from an insurer as
prescribed in subsections (1) and (2), the local treasurer shall
record the information and the date of receipt of the money and
shall immediately deposit the money in a trust or escrow account
established for the purposes of this section. The account may be
interest-bearing.
If the a mortgage on the insured property is in
default, the treasurer of the city, village, or township, upon
written
request from a the first mortgagee of the property, with
respect
to which policy proceeds were withheld and placed into a
trust
or escrow account under subsections (1) and (2) and this
subsection,
shall release to the mortgagee all
or any part of the
policy
proceeds received by the city, village, or township with
respect
to that property, not later than 10
days after receipt of
the written request by the mortgagee, to the extent necessary to
satisfy any outstanding lien of the mortgagee.
(4) Except as provided in subsection (7), money deposited in
an
account pursuant to under subsection (3) shall not be commingled
with city, village, or township funds. Any interest earned on money
placed
in a trust or escrow account shall may be retained by the
city,
village, or township to defray expenses administrative costs
incurred under this section.
(5) Except as provided in subdivision (c), the policy proceeds
deposited under subsection (3) shall immediately be forwarded to
the insured when the authorized representative of the city,
village, or township designated by the governing body of the city,
village, or township receives or is shown reasonable proof of any
of the following:
(a) That the damaged or destroyed portions of the insured
structure have been repaired or replaced, except to the extent that
the
amount withheld under this subsection section is needed to
complete repair or replacement.
(b) That the damaged or destroyed structure and all remnants
of the structure have been removed from the land on which the
structure or the remnants of the structure were situated, in
compliance with the local code requirements of the city, village,
or township in which the structure was located.
(c) That the insured has entered into a contract to perform
repair, replacement, or removal services for the insured real
property
and that the insured consents to payment of funds money
directly to the licensed contractor performing the services upon
completion.
Funds Money released under this subdivision may be
forwarded only to a licensed contractor performing services on the
insured property.
(6) Reasonable proof required under subsection (5) includes
any of the following:
(a) Originals or copies of pertinent verifiable contracts,
invoices, receipts, and other similar papers evidencing both the
work performed or to be performed and the materials used or to be
used by all contractors performing repair, replacement, or removal
services
with respect to for the insured real property, other than
a licensed contractor subject to subdivision (b).
(b) An affidavit executed by the licensed contractor that has
performed the greatest amount of repair or replacement work on the
structure, or that has done most of the clearing and removal work
if structure repair or replacement is not to be performed. The
licensed contractor shall attach to the affidavit all pertinent
contracts, invoices, and receipts and shall swear that these
attached papers correctly indicate the nature and extent of the
work performed to date by the licensed contractor and the materials
used.
(c) An inspection of the insured real property to verify that
repair, replacement, or clearing has been completed in accordance
with subsection (5).
(7)
If Except as otherwise
provided in this subsection, if
with respect to a loss, reasonable proof is not received by or
shown to an authorized representative of the city, village, or
township designated by the governing body of the city, village, or
township within 120 days after the policy proceeds portion was
received by the treasurer, the city, village, or township shall use
the retained proceeds to secure, repair, or demolish the damaged or
destroyed
structure and clear the insured property in question, so
that
the structure and property are in compliance comply with
local
code requirements and applicable ordinances of the city, village,
or
township. Any The city,
village, or township shall return to the
insured
any unused portion of the retained
proceeds. shall be
returned
to the insured. The city, village,
or township may extend
the
120-day time period listed in under
this subsection. Before and
after the effective date of the amendatory act that added this
sentence, if the authorized representative has not received or been
House Bill No. 5862 (H-1) as amended December 10, 2014
shown reasonable proof within 1 year after the insurer provided
notice to the insured under subsection (1) and the insured property
has been demolished, the city, village, or township may use the
policy proceeds for any purpose. Beginning the effective date of
the amendatory act that added this sentence, and notwithstanding
the 120-day time period, [
] the city, village, or township may
use the retained proceeds as provided in this subsection, and if
the city, village, or township sells the insured property, the city,
village, or township may [use the policy proceeds to] pay [Any
subsequent] purchaser the cost for securing and
repairing the property. The insured may file a civil action against
the city, village, or township for the return of the policy
proceeds. An action filed under this subsection must be filed
within 3 years after the insurer provided notice to the insured
under subsection (1) or 1 year after the effective date of the
amendatory act that added this sentence, whichever is later.
(8) There is no liability on the part of, and a cause of
action does not arise against, an insurer or an agent or employee
of an insurer for withholding or transferring money in the course
of complying or attempting to comply with this section. If there is
a dispute with a lienholder concerning the distribution of an
amount withheld from payment under this section, the insurer may
file an action in circuit court to identify all parties that may
have a financial interest in the withheld amount and to determine
how the withheld amount should be distributed.
(9) This section applies only to property located in a city,
village, or township described in subsection (12) if the city,
village,
or township pursuant to under
a resolution by its
governing
body notifies the commissioner director
in writing that
the city, village, or township has established a trust or escrow
account to be used as prescribed in this section and intends to
uniformly apply this section with respect to all property located
within the city, village, or township following written
notification
to the commissioner. director.
The commissioner
director shall prepare and distribute a list of all cities,
villages, and townships that have elected to apply this section to
all insurance companies transacting property insurance in this
state.
(10) A city, village, or township may apply to be added to the
list prepared under subsection (9) by making a written request for
addition
to the commissioner. director.
When a written request for
addition from a city, village, or township has been received by the
commissioner,
director, an amended list shall be prepared and
distributed
indicating the addition. The addition shall be is
effective
on the date specified by the commissioner director in the
amendment.
The commissioner director shall notify the city,
village, township, and insurance companies of the effective date of
the addition which shall be effective not less than 30 days after
receipt of notice by the insurance company. A city, village, or
township shall not apply this section to any loss that occurred
before the effective date of the addition.
(11) A city, village, or township may request to be deleted
from the list prepared under subsection (9) or may cease to apply
this section for a period of not less than 6 months upon not less
than
30 days' written notice to the commissioner. director. After
receipt
of a request to be deleted from the list, the commissioner
director shall prepare and distribute an amendment to the list
indicating
the deletion. The deletion shall be is effective on the
date
specified by the commissioner director
in the amendment. The
commissioner
director shall notify the city, village, township, and
insurance companies of the effective date of the deletion which
shall be effective not less than 30 days after receipt of the
notice by the insurance company. A city, village, or township shall
continue to apply this section to any loss that occurred before the
effective date of the deletion, notwithstanding the deletion.
(12) This section applies only to insured real property
located in cities, villages, and townships that are located in
counties with a population of 425,000 or more and to insured real
property located in cities, villages, and townships that are
located in counties with a population of less than 425,000 if the
city, village, or township has a population of 50,000 or more. This
section applies to insured real property located in a city,
village, or township that has elected to apply this section as
provided in subsection (9) or (10) or that has been included in
this section as provided in subsection (13).
(13) Cities, villages, and townships located in counties with
a population of 425,000 or more and cities, villages, and townships
that are located in counties with a population of less than 425,000
if the city, village, or township has a population of 50,000 or
more
and that are on the list prepared by the commissioner director
under section 2845(9) or (10) on October 1, 1998 are automatically
included as participants in the procedure established in this
section unless the city, village, or township makes a written
request
to be deleted pursuant to under
subsection (11).
(14)
The commissioner director shall prepare and distribute to
all insurance companies transacting property insurance in this
state by November 1, 1998 new lists indicating which cities,
villages, and townships are subject to this section and which
cities, villages, and townships are subject to section 2845.
(15) The withholding requirements of this section do not apply
if all of the following occur:
(a) Within 15 days after agreement on a final settlement
between the insured and the insurer, the insured has filed with the
insurer evidence of a contract to repair as described in subsection
(6).
(b)
The insured consents to the payment of funds money
directly to the licensed contractor performing the repair services.
Funds
Money released under this subdivision may be forwarded
only
to a licensed contractor performing the repair services on the
insured property.
(c) On receipt of the contract to repair, the insurer gives
notice to the city, village, or township in which the property is
situated
located that there will not be a withholding under this
section because of the repair contract.
(16) If the insured and the insurer have agreed on the
demolition costs or the debris removal costs as part of the final
settlement of the real property insured claim, the insurer shall
withhold
1 of the following sums, amounts,
whichever sum is the
largest,
and shall pay that sum amount
in accordance with this
section:
(a) The agreed cost of demolition or debris removal.
(b)
Twenty-five percent Until
December 31, 2014, 25% of the
actual cash value of the insured real property at the time of loss
so
long as if this amount for residential property does not exceed
$6,000.00 adjusted annually beginning June 1, 1999 in accordance
with the consumer price index.
(c) Beginning January 1, 2015, 25% of the actual cash value of
the insured real property at the time of the loss if this amount
for residential property does not exceed $12,000.00 adjusted
January 1 of each year in accordance with the consumer price index.
(d) (c)
Twenty-five percent Until
December 31, 2014, 25% of
the
final settlement of the insured real property claim so long as
if this amount for residential property does not exceed $6,000.00
adjusted annually beginning June 1, 1999 in accordance with the
consumer price index.
(e) Beginning January 1, 2015, 25% of the final settlement of
the insured real property claim if this amount for residential
property does not exceed $12,000.00 adjusted January 1 of each year
in accordance with the consumer price index.
(17) This section applies only to final settlements that
exceed 49% of the insurance on the insured real property.
(18) If an insurer withholds payment under a policy in good
faith because of suspected arson, fraud, or other question
concerning coverage, this section does not apply until the issue or
question is resolved and final settlement is made.
(19) As used in this section:
(a) "Consumer price index" means that term as defined in
section 2080.
(b) "Final settlement" means a determination of the amount due
and owing to the insured for a loss to insured real property, but
does not include contents damage, losses to personal property, or
additional coverage not contained in the building coverage portion
of the fire insurance policy, which determination is made by any of
the following means:
(i) Acceptance of a proof of loss by the insurer.
(ii) Execution of a release by the insured.
(iii) Acceptance of an arbitration award by both the insured and
the insurer.
(iv) Judgment of a court of competent jurisdiction.
(c) "Home insurance" means that term as defined in section
2103.
(d) "Residential property" means property on which home
insurance can be issued.
Sec. 2845. (1) If a claim is filed for a loss to insured real
property due to fire or explosion and a final settlement is reached
on the loss to the insured real property, an insurer shall withhold
from payment 25% of the actual cash value of the insured real
property at the time of the loss or 25% of the final settlement,
whichever
is less. For Until
December 31, 2014, for residential
property, the 25% settlement or judgment withheld shall not exceed
$6,000.00 adjusted annually beginning June 1, 1999 in accordance
with the consumer price index. Beginning January 1, 2015, for
residential property, the 25% settlement or judgment withheld shall
not exceed $12,000.00 adjusted January 1 of each year in accordance
with
the consumer price index. The commissioner
director shall
notify annually all insurance companies transacting property
insurance in this state as to the new adjusted amount. At the time
that 25% of the settlement or judgment is withheld, the insurer
shall give notice of the withholding to the treasurer of the city,
village, or township in which the insured real property is located,
to the insured, and to any mortgagee having an existing lien or
liens against the insured real property, if the mortgagee is named
on
the policy. In the case of For
a judgment, notice shall also be
provided to the court in which judgment was entered. The notice
shall
must include all of the following:
(a) The identity and address of the insurer.
(b) The name and address or forwarding address of each
policyholder, including any mortgagee.
(c)
Location The location of the insured real property.
(d) The date of loss, policy number, and claim number.
(e) The amount of money withheld.
(f) A statement that the city, village, or township may have
the withheld amount paid into a trust or escrow account established
for the purposes of this section if within 15 days after the
mailing of the notice the city, village, or township states that
the money should be withheld to protect the public health and
safety; otherwise, the withheld amount shall be paid to the insured
15 days after the mailing of the notice.
(g) An explanation of the provisions of this section.
(2)
In order for For a city, village, or township to escrow
the amount withheld by the insurer, and to retain that amount, the
following procedure shall be used:
(a) An authorized representative of the city, village, or
township shall request the insurer to pay the withheld amount into
an escrow account maintained by the treasurer of the city, village,
or township. A final settlement that exceeds 49% of the insurance
on the insured real property is prima facie evidence that the
damaged insured structure violates existing health and safety
standards of the city, village, or township and constitutes cause
for the escrowing of the withheld amount as surety for the repair,
replacement, or removal of the damaged structure.
(b)
In the case of For a settlement, the request under
subdivision (a) shall be sent to the insurer with a copy to the
insured
and any mortgagees. The copy to the insured shall must
contain
the notice required under subdivision (d). Upon On receipt
of the request, the insurer shall forward the withheld amount to
the treasurer of the city, village, or township, and shall provide
notice of the forwarding to the insured and any mortgagees.
(c)
In the case of For a judgment, the request under
subdivision (a) shall be sent to the insurer with a copy to the
insured, any mortgagees, and the court in which judgment was
entered.
The copy to the insured shall must
contain the notice
required
under subdivision (d). Upon the On
motion of the city,
village, or township, the court shall order the withheld amount
transmitted to the treasurer of the city, village, or township.
(d) The city, village, or township shall notify the insured
that the insured has 10 days from the date of the mailing of the
notice to object to the city's, village's, or township's retention
of
the withheld amount. The notice shall must identify the
authorized
representative of the city, village, or township that to
whom
the insured should address his or her
objections to and shall
must state that the insured may do either of the following:
(i) Seek resolution with the representative of the city,
village, or township designated to receive and resolve objections
under this section. The city, village, or township shall make a
final determination and shall notify the insured of that
determination not later than 30 days after receipt of notice that
the insured wishes to seek resolution under this subparagraph. This
final determination shall include notice to the insured that if the
insured is still dissatisfied with the city's, village's, or
township's determination, the insured may seek relief in circuit
court.
(ii) Seek relief in the circuit court.
(3) Upon receipt of money and information from an insurer as
prescribed in subsections (1) and (2), the local treasurer shall
record the information and the date of receipt of the money and
shall immediately deposit the money in a trust or escrow account
established for the purposes of this section. The account may be
interest-bearing.
If the a mortgage on the insured property is in
default,
the treasurer of the city, village, or township, upon on
written
request from a the first mortgagee of the property, with
respect
to which policy proceeds were withheld and placed into a
trust
or escrow account under subsections (1) and (2) and this
subsection,
shall release to the mortgagee all
or any part of the
policy
proceeds received by the city, village, or township with
respect
to that property, not later than 10
days after receipt of
the written request by the mortgagee, to the extent necessary to
satisfy any outstanding lien of the mortgagee.
(4) Except as provided in subsection (7), money deposited in
an
account pursuant to under subsection (3) shall not be commingled
with city, village, or township funds. Any interest earned on money
placed
in a trust or escrow account shall may be retained by the
city,
village, or township to defray expenses administrative costs
incurred under this section.
(5)
Except as provided in subdivision (c), the policy proceeds
money deposited under subsection (3) shall immediately be forwarded
to the insured when the authorized representative of the city,
village, or township designated by the governing body of the city,
village, or township receives or is shown reasonable proof of any
of the following:
(a) That the damaged or destroyed portions of the insured
structure have been repaired or replaced, except to the extent that
the
amount withheld under this subsection section is needed to
complete repair or replacement.
(b) That the damaged or destroyed structure and all remnants
of the structure have been removed from the land on which the
structure or the remnants of the structure were situated, in
compliance with the local code requirements of the city, village,
or township in which the structure was located.
(c) That the insured has entered into a contract to perform
repair, replacement, or removal services for the insured real
property
and that the insured consents to payment of funds money
directly to the contractor performing the services upon completion.
Funds
Money released under this subdivision may be forwarded
only
to a contractor performing services on the insured property.
(6) Reasonable proof required under subsection (5) includes
any of the following:
(a) Originals or copies of pertinent verifiable contracts,
invoices, receipts, and other similar papers evidencing both the
work performed or to be performed and the materials used or to be
used by all contractors performing repair, replacement, or removal
services
with respect to for the insured real property, other than
a contractor subject to subdivision (b).
(b) An affidavit executed by the contractor that has performed
the greatest amount of repair or replacement work on the structure,
or that has done most of the clearing and removal work if structure
repair or replacement is not to be performed. The contractor shall
attach to the affidavit all pertinent contracts, invoices, and
receipts and shall swear that these attached papers correctly
indicate the nature and extent of the work performed to date by the
contractor and the materials used.
(c) An inspection of the insured real property to verify that
repair, replacement, or clearing has been completed in accordance
with subsection (5).
(7)
If Except as otherwise
provided in this subsection, if
with respect to a loss, reasonable proof is not received by or
shown to an authorized representative of the city, village, or
House Bill No. 5862 (H-1) as amended December 10, 2014
township designated by the governing body of the city, village, or
township within 120 days after the policy proceeds portion was
received by the treasurer, the city, village, or township shall use
the retained proceeds to secure, repair, or demolish the damaged or
destroyed
structure and clear the insured property in question, so
that
the structure and property are in compliance comply with
local
code requirements and applicable ordinances of the city, village,
or
township. Any The city,
village, or township shall return to the
insured
any unused portion of the retained
proceeds. shall be
returned
to the insured. The city, village,
or township may extend
the
120-day time period listed in under
this subsection. Before and
after the effective date of the amendatory act that added this
sentence, if the authorized representative has not received or been
shown reasonable proof within 1 year after the insurer provided
notice to the insured under subsection (1) and the insured property
has been demolished, the city, village, or township may use the
policy proceeds for any purpose. Beginning the effective date of
the amendatory act that added this sentence, and notwithstanding
the 120-day time period, [
] the city,
village, or township may [use the policy proceeds to] pay [Any
subsequent] purchaser the cost for securing and
repairing the property. The insured may file a civil action against
the city, village, or township for the return of the policy
proceeds. An action filed under this subsection must be filed
within 3 years after the insurer provided notice to the insured
under subsection (1) or 1 year after the effective date of the
amendatory act that added this sentence, whichever is later.
(8) There is no liability on the part of, and a cause of
action shall not arise against, an insurer or an agent or employee
of an insurer for withholding or transferring money in the course
of complying or attempting to comply with this section. If there is
a dispute with a lienholder concerning the distribution of an
amount withheld from payment under this section, the insurer may
file an action in circuit court to identify all parties that may
have a financial interest in the withheld amount and to determine
how the withheld amount should be distributed.
(9) This section applies only to property located in a city,
village, or township described in subsection (12) if the city,
village, or township pursuant to a resolution by its governing body
notifies
the commissioner director in writing that the city,
village, or township has established a trust or escrow account to
be used as prescribed in this section and intends to uniformly
apply this section with respect to all property located within the
city, village, or township following written notification to the
commissioner.
director. The commissioner director shall
prepare and
distribute a list of all cities, villages, and townships that have
elected to apply this section to all insurance companies
transacting property insurance in this state.
(10) A city, village, or township may apply to be added to the
list prepared under subsection (9) by making a written request for
addition
to the commissioner. director.
When a written request for
addition from a city, village, or township has been received by the
commissioner,
director, an amended list shall be prepared and
distributed
indicating the addition. The addition shall be is
effective
on the date specified by the commissioner director in the
amendment.
The commissioner director shall notify the city,
village, township, and insurance companies of the effective date of
the addition which shall be effective not less than 30 days after
receipt of notice by the insurance company. A city, village, or
township shall not apply this section to any loss that occurred
before the effective date of the addition.
(11) A city, village, or township may request to be deleted
from the list prepared under subsection (9) or may cease to apply
this section for a period of not less than 6 months upon not less
than
30 days' written notice to the commissioner. director. After
receipt
of a request to be deleted from the list, the commissioner
director shall prepare and distribute an amendment to the list
indicating
the deletion. The deletion shall be is effective on the
date
specified by the commissioner director
in the amendment. The
commissioner
director shall notify the city, village, township, and
insurance companies of the effective date of the deletion which
shall be effective not less than 30 days after receipt of the
notice by the insurance company. A city, village, or township shall
continue to apply this section to any loss that occurred before the
effective date of the deletion, notwithstanding the deletion.
(12) This section applies only to insured real property
located in cities, villages, and townships that are located in
counties with a population of less than 425,000 except that this
section does not apply to insured real property located in cities,
villages, and townships that are located in counties with a
population of less than 425,000 if the city, village, or township
has a population of 50,000 or more. This section applies to insured
real property located in a city, village, or township that has
elected to apply this section as provided in subsection (9) or
(10).
(13) The withholding requirements of this section do not apply
if all of the following occur:
(a) Within 15 days after agreement on a final settlement
between the insured and the insurer, the insured has filed with the
insurer evidence of a contract to repair as described in subsection
(6).
(b)
The insured consents to the payment of funds money
directly
to the contractor performing the repair services. Funds
Money released under this subdivision may be forwarded only to a
contractor performing the repair services on the insured property.
(c) On receipt of the contract to repair, the insurer gives
notice to the city, village, or township in which the property is
situated
located that there will not be a withholding under this
section because of the repair contract.
(14) If the insured and the insurer have agreed on the
demolition costs or the debris removal costs as part of the final
settlement of the real property insured claim, the insurer shall
withhold
1 of the following sums, amounts,
whichever sum is the
largest,
and shall pay that sum amount
in accordance with this
section:
(a) The agreed cost of demolition or debris removal.
(b)
Twenty-five percent Until
December 31, 2014, 25% of the
actual cash value of the insured real property at the time of loss
so
long as if this amount for residential property does not exceed
$6,000.00 adjusted annually beginning June 1, 1999 in accordance
with the consumer price index.
(c) Beginning January 1, 2015, 25% of the actual cash value of
the insured real property at the time of the loss if this amount
for residential property does not exceed $12,000.00 adjusted
January 1 of each year in accordance with the consumer price index.
(d) (c)
Twenty-five percent Until
December 31, 2014, 25% of
the
final settlement of the insured real property claim so long as
if this amount for residential property does not exceed $6,000.00
adjusted annually beginning June 1, 1999 in accordance with the
consumer price index.
(e) Beginning January 1, 2015, 25% of the final settlement of
the insured real property claim if this amount for residential
property does not exceed $12,000.00 adjusted January 1 of each year
in accordance with the consumer price index.
(15) This section applies only to final settlements that
exceed 49% of the insurance on the insured real property.
(16) If an insurer withholds payment under a policy in good
faith because of suspected arson, fraud, or other question
concerning coverage, this section does not apply until the issue or
question is resolved and final settlement is made.
(17) As used in this section:
(a) "Consumer price index" means that term as defined in
section 2080.
(b) "Final settlement" means a determination of the amount due
and owing to the insured for a loss to insured real property, but
does not include contents damage, losses to personal property, or
additional coverage not contained in the building coverage portion
of the fire insurance policy, which determination is made by any of
the following means:
(i) Acceptance of a proof of loss by the insurer.
(ii) Execution of a release by the insured.
(iii) Acceptance of an arbitration award by both the insured and
the insurer.
(iv) Judgment of a court of competent jurisdiction.
(c) "Home insurance" means that term as defined in section
2103.
(d) "Residential property" means property on which home
insurance can be issued.
