Section 215 ILCS 5/397.1 - Certificate regarding payment of taxes and expenses on property sustaining loss(a) It shall be unlawful for any company transacting insurance business in this State to pay a claim of an insured property owner for loss by fire or explosion to a structure located in this State where the amount recoverable for loss to the structure under a policy exceeds $25,000, until the insurance company receives the certificate required by this Section. A notice, to the State's Attorney of the county where the structure is located, of the insurers intent to pay a claim shall include the name of the property owner, the address of the property, its legal description, the permanent real estate index number that identifies the property for purposes of taxation, and the amount of the claim to be paid.(b) For purposes of this Section, the following definitions are applicable: (1) "Insured property owner" is a person named as an insured who is the owner, title-holder or mortgagee of a structure, the holder of an interest secured by the structure, the beneficiary of a land trust owning or holding title to a structure, the lessee of a structure with a contractual obligation for property taxes, or the assignee of any such person.(2) "Amount recoverable" is the dollar amount payable under all insurance policies for loss to the structure.(3) "Proceeds" is the dollar amount payable for loss to the structure under an insurance policy.(4) "Delinquent property taxes" are those property taxes on the property which are delinquent pursuant to Section 21-15, 21-20, or 21-25 of the Property Tax Code, including those delinquent taxes on property forfeited under Section 21-225 of the Property Tax Code, as of the date of loss. In determining delinquent property taxes under this Section, the amount of property taxes for which a certificate of error has been issued pursuant to Section 14-10 or 14-20 of the Property Tax Code shall not be considered delinquent.
(5) "Incurred demolition expense" is: a. the cost of demolishing or removing a structure from property by or at the expense of a unit of local government if the demolition or removal occurs on a date preceding the later of (i) the acceptance by the insurance company of a Proof of Loss for an agreed amount of proceeds, or (ii) the date of receipt by the unit of local government of a request for execution of the certificate required by this Section; or b. the amount estimated by the unit of local government when it receives a request to execute the certificate required by this Section; or c. the amount ordered to be withheld by a court within 28 days after a unit of local government receives a request for execution of the certificate required by this Section. The unit of local government must be a party to such proceeding. Incurred demolition expense shall be determined under subparagraph a. whenever possible. In determining the incurred demolition expense under subparagraph b., the unit of local government shall make its estimate and execute the certificate within 30 days after receiving a request for execution. If the unit of local government shall fail within 30 days to execute the certificate, as required by subparagraph a., the company can proceed to make payment of the claim as if the certificate had been received showing no unpaid demolition costs. The request for execution may be served personally, and may be proven by a written receipt signed by the local official as of the date the request was made or by service on the local official by certified mail, return receipt requested. A court order under subparagraph c. shall supersede an estimate under subparagraph b.
(6) "Property" is the lot on which the structure is located.(7) "Structure" is a building.(8) "Claim" is the demand by an insured for payment under an insurance policy or policies.(9) "Proof of Loss" is the document on which an insured formally presents his claim to an insurance company.(10) "Certificate" is the executed form prescribed by the Director of Insurance.(11) "Executed" means signed by the appropriate official or unit of government.(c) For any claim to which this Section is applicable, an insured property owner must submit one of the following to the insurance company:(1) a certificate that with respect to the property there are:a.no delinquent property taxes, andb.no unpaid incurred demolition expenses;(2) a certificate setting forth with respect to the property:a.the amount of unpaid delinquent property taxes,b.the amount of unpaid incurred demolition expense, andc.a direction by an insured property owner to the insurance company to pay the unpaid delinquent property taxes and unpaid incurred demolition expenses.(d)(1) Except as provided in paragraph (2) of this subsection (d), if a certificate is submitted pursuant to paragraph (2) of subsection (c) of this Section, the insurance company shall pay the unpaid delinquent property taxes and unpaid incurred demolition expense from the proceeds payable by issuing a draft or check payable to the appropriate tax collector or unit of local government. Any proceeds remaining shall be paid to the insured property owner.
(2) In the event incurred demolition expense is determined by estimation under paragraph (5) of subsection (b) of this Section in cities of over 2,000,000, the insurance company shall hold the amount estimated until an amended certificate executed by the appropriate local government official is submitted stating (i) that no demolition expense will be incurred or (ii) the actual unpaid incurred demolition expense. The insurance company shall then issue a draft or check payable to the unit of local government for the actual unpaid incurred demolition expense. Any proceeds remaining shall be paid to the insured property owner. In determining the amount of proceeds remaining under this paragraph, the insured property owner shall receive interest on the amount withheld from the date the certificate is executed as provided in Section 2 of the Interest Act.
(e) If, under this Section, the proceeds payable are less than the amount of the unpaid delinquent property taxes and unpaid incurred demolition expense, unpaid property taxes shall be paid first.(f) If incurred demolition expense withheld pursuant to subparagraphs b. or c. of paragraph 5 of subsection (b) of this Section exceeds the ultimate cost of demolition, the excess shall first be applied to unpaid delinquent property taxes. Any amount of proceeds remaining shall be paid to the insured property owner.(g) Nothing in this Section shall be construed as:(1) making an insurance company liable for any amount in excess of the proceeds payable under its insurance policy unless the insurance company shall have made payment to the named insured without satisfying the requirements of this Section;(2) making a unit of local government or tax collector an insured under an insurance policy; or(3) creating an obligation for an insurance company to pay unpaid delinquent property taxes or unpaid incurred demolition expense other than as provided in subsection (d) of this Section.(h) An insurance company making a payment of proceeds under this Section for unpaid delinquent taxes or unpaid incurred demolition expense shall be entitled to the full benefit of such payment, including subrogation rights and other rights of assignment.(i) Unpaid property taxes and unpaid incurred demolition expense for a claim for loss to a structure occurring after the issuance of a tax deed pursuant to Section 22-40 of the Property Tax Code shall not include any unpaid property tax or unpaid demolition expense arising before the issuance of the tax deed.(j) The county collector shall be designated as the local official who shall execute the certificate required by this Section regarding delinquent property taxes. The village clerk or city clerk in incorporated areas and the official in charge of the county building department in unincorporated areas shall be designated as the local official who shall execute the certificate required by this Section regarding demolition expenses.(k) A fee not to exceed $5 may be charged by a unit of local government for execution of the certificate required by this Section.(l) This Section shall retroactively apply to any policy issued or renewed on or after January 1, 1978 for which a claim subject to this Section remains unpaid as of the effective date of this amendatory Act of 1978.P.A. 87-507; 88-667, eff. 9/16/1994; 88-670, eff. 12/2/1994.