Source: Sherman Publications

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Township eyes fire insurance withholding program

by David Fleet

December 21, 2011

Atlas Twp.- Cleaning up after a house fire may soon be a sure thing for township residents.

On Monday night, the board of trustees tabled a resolution until the January meeting that would withhold township residents insurance money in escrow from casualty losses including fire or explosion to repair, replace or remove damaged structures that may violate local codes.

About 500 municipalities statewide currently utilize the fire insurance withholding program.

Township Supervisor Shirley Kautman-Jones said the township never enacted the fire insurance withholding resolution when it became available.

"Our goal is to assure they (property owners) meet the obligations of the township to take care of the property. The state has a specified amount to what can be withheld," she said. "When the insurance does a payout, a portion is forwarded to the township. The resolution is designed to protect the taxpayers—we are not looking to be a bank or gouge residents. There are a lot of strange situations out there."

According to the insurance code, municipalities with a population of less than 50,000 located in counties with less than 425,000 in population that have passed resolutions establishing escrow accounts are allowed to escrow 25 percent of a fire insurance settlement, for fire and explosion losses. Atlas Township has about 6,700 residents. For residential property, the 25 percent settlement shall not exceed the annually adjusted amount of $7,873.

Trustee Barry June questioned the resolution.

"I'm not in favor of a law that grabs anyone money," he said. "Especially at a time of the loss of a home—it's just one more thing homeowners will have to contend with."

Grand Blanc Township Fire Chief Jim Harmes supports the program.

"It does not hurt anything," he said. "All the money goes back to the resident. If the structure becomes an eyesore, it makes the neighborhood look bad. Often residents call the township and let us know if a home is left unattended."

Grand Blanc Township includes about 37,000 residents, compared to 6,700 in Atlas Township. Harmes said the township has used the withheld insurance about three times in 23 years.

Harmes understands that it appears to be kicking a homeowner when they are down, but it's just not the case.

"It's not like a penalty. Most people want to get back in their home after a fire. It's upholding an obligation to the community—it's like mowing your yard. Even with the insurance money, it takes time to clean up the fire. Recently we had a home go 16 months before the insurance money kicked in and we had it cleaned up. The house became a real problem in the community."