The city is hereby authorized to establish and does by this article enact the procedures set forth in K.S.A. 40-3901 et seq., whereby no insurance company shall pay a claim under any policy covering any building or other structure located within the city for which the amount recoverable for such loss or damage to the building or other structure under all policies is in excess of seventy five percent (75%) of the face value of the policy covering such building or other insured structure, unless there is compliance with the procedures set forth in this article.

(Code 1961, 8-6-1; Ord. 3891; Code 2023)

(a)   There is hereby created and established a lien in favor of the city in and to 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 for which the amount recoverable for all such loss or damage to the building or other structure under all policies is in excess of seventy-five percent (75%) of the face value of the policy or policies covering such building or other insured structure. Such lien shall arise upon any unpaid tax, special ad valorem levy, or other charge imposed upon real property by or on behalf of said 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.

(b)   Prior to final settlement of any claim covered by this section, the insurer or insurers shall contact the County Treasurer of Anderson 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 amount owing under said encumbrances, a draft payable to the County Treasurer of Anderson County, Kansas.

(c)   Such transfer of proceeds shall be on a pro rata basis by all insurance companies insuring the building or other structure.

(Code 1961, 8-6-2; Ord. 3891; Code 2023)

(a)   When final settlement on a covered claim has been agreed to between the named insured or insureds and the company or companies, and said final settlement exceeds seventy-five percent (75%) of the face value of the policy or policies covering a 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 fifteen percent (15%) of the covered claim payment, unless the City Manager has determined and the city’s Director of Inspection and Planning 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 proceeds shall be on a pro rata basis by all companies insuring the building or other structure. Proceeds under the policy or policies remaining after the transfer to the city shall be disbursed in accordance with policy terms.

(c)   Upon transfer of the funds as required in subsection (a), every 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 between the insurance company or companies and the insured or insureds, whereupon the city of Garnett shall contact the named insured or insureds by certified mail, return receipt requested, to notify them and each of them that said insurance proceeds have been received by the city, and apprise them of the procedures to be followed under this article.

(Code 1961, 8-6-3; Ord. 3891; Code 2023)

The City Treasurer of the city is hereby authorized and shall create a fund to be known as the “insurance proceeds fund”. All monies received by the City Treasurer, as provided for by this article, shall be deposited into this fund, in an interest-bearing account.

(Code 1961, 8-6-4; Ord. 3891; Code 2023)

(a)   Upon receipt of said monies, the City Treasurer shall immediately notify the City Manager and the city Director of Inspection and Planning of said receipt and transmit to each of them all documentation received from the insurance company or companies.

(b)   Within thirty (30) days of the receipt of said monies, the city Director of Inspection and Planning shall after prior investigation report his or her findings to the City Manager, who will then determine whether the city shall initiate proceedings under the provisions of K.S.A. 12-1750 et seq., as amended.

(c)   Prior to the expiration of the aforesaid thirty (30) days, the City Manager shall notify the City Treasurer whether the city intends to initiate proceedings under K.S.A. 12-1750 et seq., as amended.

(d)   If the City Manager, after receiving the report of the city Director of Inspection and Planning, has determined that proceedings under K.S.A. 12-1750 et seq., as amended, shall be initiated, such procedures shall be initiated immediately, but in any event no later than forty-five (45) days after receipt of said monies by the City Treasurer.

(e)   Upon notification to the City Treasurer by the City Manager that no proceedings shall be initiated under K.S.A. 12-1750 et seq., as amended, the City Treasurer shall refund said monies, plus accrued interest, to the insured or insureds as identified in the communication from the insurance company or companies. Such refund shall be accomplished within forty-five (45) days of the receipt of said monies from the insurance company or companies.

(Code 1961, 8-6-5; Ord. 3891; Code 2023)

If the city has proceeded to remove the building or other structure and related debris, under the provisions of K.S.A. 12-1750 et seq., as amended:

(a)   Proceeds received from the insurance company or companies by the City Treasurer under authority of this article relating to that building or other structure shall be used to reimburse the city for any expenses thereby incurred by the city. Upon reimbursement therefrom, the city shall immediately release any lien resulting therefrom.

(b)   Should the expenses incurred by the city exceed the insurance proceeds paid over to the City Treasurer, the city shall establish a new lien as authorized by K.S.A. 12-1756 in an amount equal to such expenses incurred in excess of such reimbursement.

(c)   All monies in excess of that which is ultimately necessary to comply with provisions for the removal of the building or structure and related debris, less salvage value if any, shall be paid to the insured or insureds.

(Code 1961, 8-6-6; Ord. 3891; Code 2023)

This article shall apply to claims arising on all buildings or structures situated within the city and which are covered by one or more policies of insurance covering such risks. The City Manager is hereby authorized to promulgate reasonable regulations to carry out the provisions hereof.

(Code 1961, 8-6-7; Ord. 3891; Code 2023)

The provision of 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 1961, 8-6-8; Ord. 3891; Code 2023)

Insurers complying with the provisions of this article, or attempting in good faith to comply therewith, 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, or releasing or disclosing any information, pursuant to this article.

(Code 1961, 8-6-9; Ord. 3891; Code 2023)

The City Clerk is hereby authorized and directed to notify the commissioner of insurance of Kansas of the adoption hereof, within fourteen (14) days of such adoption.

(Code 1961, 8-6-10; Ord. 3891; Code 2023)