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In the event of a loss, what are the responsibilities of the insurance company and the participating municipality?

In the event of a loss in one of the participating municipalities the following steps should occur:

  • Within 15 days after agreement on a final settlement between the insured and the insurer, the insurance company determines whether the loss meets the guidelines of the program.  If the insured has filed with the insurer evidence of a contract to repair the property and consents to the payment of funds directly to the contractor performing the repair services, the insurer should notify the participating municipality there will not be a withholding because of repair contract.  (Section 2845(13) & Section 2227(15)).
  • If the program eligibility guidelines are met, the insurer sends written notice of the withholding to the following:
    •  contact person listed for the particular municipality;
    •  the insured;
    • any mortgagee; and
    • the court, if any judgment was entered.

      (Sections 2227(1) & 2845(1) covers the required elements of this written notification)
  • The municipality has 15 days after the mailing of the notice from the insurance company to respond and request the withheld amount be paid into its escrow account (Sections 2845(1)(f) & 2227(1)(f)).  A copy of the municipality’s response to the insurance company must also be sent to the insured, any mortgagees, and the court, as applicable, advising that they have 10 days from the mailing to object to the retention of the withheld amount (Sections 2845(2)(d) & 2227(2)(d)).