St. Louis City working to suspend the ordinance that holds part of insurance claims from tornado victims
ST. LOUIS, Mo. (First Alert 4) -Cheryl Walker owns a property in St. Louis’ The Ville neighborhood.
She claims she moved a tenant into a hotel while she assessed the damage because the house needs multiple repairs.
Walker told First Alert 4, “I’ve never had a claim, I’ve owned this since 2006, I’ve always paid my s. This was new for me.”
Walker said her insurance agent began walking her through the process.
“The adjuster says to me, ‘ma’am, you’re not going to get all of it because there’s an ordinance in your city that says we have to give them 25%.’ and I said ‘that’s not fair. I need all my money,” said Walker.
According to a Missouri law pertaining to repairing structures, “If there are proceeds of any insurance policy based upon a covered claim payment made for damage or loss to a building or other structure caused by or arising out of any fire, explosion, or other casualty loss, the ordinance may establish a procedure for the payment of up to 25 percent of the insurance proceeds, as set forth in this subsection. The order or ordinance shall apply only to a covered claim payment which is in excess of 50 percent of the face value of the policy covering a building or other structure:
(1) The insurer shall withhold from the covered claim payment up to 25 percent of the covered claim payment, and shall pay such moneys to the city to deposit into an interest-bearing ...”
Insurance agent Ed Fogelbach said this can be a difficult conversation for agents and adjusters to have with clients.
He said, “Once the insurance company is told they have to send the 25% to the city, you know there’s no choice. It is what’s required.”
St. Louis Mayor Cara Spencer told First Alert 4 in a statement:
“We are actively working on finding a way to suspend this ordinance, make an exception for natural disasters like this, or find some other solution quickly to make sure property owners who have already lost so much do not have to see any of their insurance payouts held in escrow when it’s direly needed for rebuilding. While this ordinance has been highly effective, under normal circumstances, in ensuring that severely damaged buildings are either repaired or demolished and not left as shells by absent property owners, this is clearly a situation where we must make an exception.”
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