How HB 2854 changes current law

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This bill amends the requirements for municipalities regarding the use and return of insurance proceeds from fire loss claims.

• Section 508

  (d.1) (1) Except as otherwise provided in this subsection, if, with respect to a loss of buildings or other structure to which subsection (c) of this section applies, the designated officer of the municipality fails to receive reasonable proof, no later than one hundred twenty (120) days after the proceeds are received by the municipality, that repairs, removal or securing of the buildings or other structure have been completed, the municipality shall use the proceeds to repair, remove or secure the buildings or other structure in order for the buildings or other structure to comply with municipal code requirements and applicable ordinances of the municipality. (2) The municipality may extend the one hundred twenty-day time period under paragraph (1) of this subsection for up to two hundred forty-five (245) days. (3) If the municipality received the proceeds on or before the effective date of this paragraph, the time period for receipt of reasonable proof under paragraph (1) shall be one year after the municipality received the proceeds. (4) The municipality shall return to the named insured any portion of the proceeds not used in accordance with this subsection. (5) If the municipality fails to return the proceeds as required under this section, the named insured may file a civil action against the municipality for the return of the proceeds. (6) An action under this subsection must be filed no later than three years after the municipality received the proceeds or one year after the effective date of this paragraph, whichever is later.

  This addition establishes specific obligations for municipalities regarding the management and return of fire loss claim proceeds.