Chapter 632

632.101 632.101 Policy terms.

632.101(1) (1) Affected policies. Except as provided in sub. (2), every property insurance policy issued or delivered in this state, including property insurance policies issued under the mandatory risk-sharing plan operating under s. 619.01, that insures real property located in a 1st class city against loss caused by fire or explosion shall provide for payment of any final settlement under the policy in the manner described in ss. 632.102 to 632.104.

632.101(2) (2) Excluded policies. Sections 632.10 to 632.104 do not apply to property insurance policies issued in any of the following circumstances:

632.101(2)(a) (a) By the local government property insurance fund under ch. 605.

632.101(2)(b) (b) On a one- or 2-family dwelling that is occupied by the named insured as a principal residence, if any of the following is satisfied:

632.101(2)(b)1. 1. The named insured gives proof of occupancy to the insurer by a valid Wisconsin operator’s license.

632.101(2)(b)2. 2. If the named insured does not possess a valid Wisconsin operator’s license, the named insured gives proof of occupancy to the 1st class city by documentation approved by the 1st class city. Upon acceptance of the proof, the 1st class city shall immediately notify the insurer that a policy issued on the property is exempt from ss. 632.10 to 632.104.

632.101 History History: 1989 a. 347; 1991 a. 315.

632.102 632.102 Payment of final settlement.

632.102(1) (1) Withholding. An insurer shall withhold from payment a portion of the final settlement as determined under sub. (2), if all of the following apply:

632.102(1)(a) (a) The amount of the final settlement exceeds 50 percent of the total of all limits under all insurance policies covering the building and any other structure affixed to land that sustained the loss.

632.102(1)(b) (b) The total amount of all insurance covering the building and any other structure affixed to land that sustained the loss is at least $5,000.

632.102(2) (2) Amount withheld. The insurer shall withhold from payment of the final settlement an amount that is equal to the greater of the following:

632.102(2)(a) (a) Twenty-five percent of the final settlement.

632.102(2)(b) (b) The lesser of $7,500 or the limits under the policy for coverage of the building or other structure affixed to land that sustained the loss.

632.102(3) (3) Notice of withholding.

632.102(3)(a) (a) Within 10 days after withholding the amount determined under sub. (2), the insurer shall deliver written notice of the withholding to all of the following persons:

632.102(3)(a)1. 1. The building inspection official of the 1st class city in which the insured real property is located.

632.102(3)(a)2. 2. The named insured.

632.102(3)(a)3. 3. Any mortgagee or other lienholder who has an existing lien against the insured real property and who is named in the policy.

632.102(3)(a)4. 4. If the final settlement was determined by judgment, the court in which the judgment was entered, in addition to the persons described in subds. 1. to 3.

632.102(3)(b) (b) The notice of withholding shall include all of the following information:

632.102(3)(b)1. 1. The identity and address of the insurer.

632.102(3)(b)2. 2. The name and address of the named insured and each mortgagee or other lienholder entitled to notice under par. (a) 3.

632.102(3)(b)3. 3. The address of the insured real property.

632.102(3)(b)4. 4. The date of loss, policy number and claim number.

632.102(3)(b)5. 5. The amount of money withheld.

632.102(3)(b)6. 6. A summary of ss. 632.10 to 632.104, including a statement explaining all of the following:

632.102(3)(b)6.a. a. That for the 1st class city to qualify for reimbursement of expenses from the funds withheld under this section, the 1st class city must, after the loss occurs but within 90 days after delivery of the notice of withholding under this subsection, commence proceedings under s. 66.0413, 254.595 or 823.04 or under a local ordinance relating to demolition or abatement of nuisances or obtain a release signed by the named insured consenting to demolition with respect to the building or other structure; that if the 1st class city commences the proceedings or obtains the release within that time period, a part or all of the withheld funds may be used to defray the 1st class city’s expenses; and that the withheld funds will be released to the named insured and other interests named in the policy if the 1st class city does not commence the proceedings or obtain the release within that time period.

632.102(3)(b)6.b. b. That the withheld funds may be released to the named insured and other interests named in the policy if an official of the 1st class city determines under s. 632.103 (3) that the building or other structure has been repaired or replaced or the site restored to a dust-free and erosion-free condition.

632.102(4) (4) Insurer’s liability. In no event may an insurer be liable under a policy subject to ss. 632.10 to 632.104 for any amount greater than the lesser of the final settlement or the limits of liability set out in the policy.

632.102(5) (5) Immunity for insurer. No cause of action may arise against and no liability may be imposed upon an insurer or an agent or employee of an insurer for paying, withholding or transferring all or any portion of a final settlement as provided in ss. 632.10 to 632.104.

632.102 History History: 1989 a. 347; 1993 a. 27; 1995 a. 27; 1999 a. 150 s. 672.

632.103 632.103 Procedure for payment of withheld funds.

632.103(1) (1) Release to 1st class city.

632.103(1)(a) (a) To qualify for reimbursement of expenses under sub. (2), the 1st class city must do any of the following:

632.103(1)(a)1. 1. Commence proceedings under s. 66.0413, 254.595 or 823.04 or under a local ordinance relating to demolition or abatement of nuisances, with respect to the building or other structure for which the funds are withheld.

632.103(1)(a)2. 2. Obtain a release signed by the named insured consenting to demolition of the building or other structure with respect to which the funds are withheld.

632.103(1)(b) (b) The 1st class city shall commence proceedings under par. (a) 1. or obtain the release under par. (a) 2. after the occurrence of the loss to the building or other structure by fire or explosion but within 90 days after delivery of the notice of withholding under s. 632.102 (3).

632.103(1)(c) (c) When proceedings described in par. (a) 1. are commenced, the 1st class city shall notify, in writing, the insurer, the named insured and any mortgagee or other lienholder identified in the notice of withholding under s. 632.102 (3) (b) 2. that the proceedings are commenced.

632.103(1)(d) (d) The 1st class city shall release all interest in the amount withheld under s. 632.102 (2) and the insurer shall promptly pay that amount to the named insured and other interests named in the policy if any of the following occurs:

632.103(1)(d)1. 1. The 1st class city fails to commence proceedings described in par. (a) 1. or obtain a release described in par. (a) 2. within the period provided in par. (b).

632.103(1)(d)2. 2. The 1st class city fails to notify the insurer as provided in par. (c).

632.103(2) (2) Reimbursement of expenses.

632.103(2)(a) (a) If the 1st class city satisfies sub. (1) (a) and (b) and, if applicable, notifies the insurer as required in sub. (1) (c), the insurer shall promptly upon receiving the statement under par. (b) deliver to the 1st class city funds withheld from the named insured’s final settlement under s. 632.102 (2), to the extent necessary to reimburse the 1st class city for any of the following expenses:

632.103(2)(a)1. 1. Costs incurred in the course of enforcing ss. 66.0413 and 66.0427 or a local ordinance relating to demolition, with respect to the building or other structure for which the funds are withheld.

632.103(2)(a)2. 2. Costs incurred in acting in accordance with a release signed by the named insured consenting to demolition of the building or other structure with respect to which the funds are withheld.

632.103(2)(a)3. 3. Costs incurred in abating a public nuisance under s. 254.595 or 823.04 or under a local ordinance relating to abating a public nuisance, with respect to the building or other structure for which the funds are withheld.

632.103(2)(a)4. 4. Reasonable administrative expenses incurred in connection with activities described in subds. 1. to 3., including but not limited to expenses for inspection, clerical, supervisory and attorney services.

632.103(2)(b) (b) The insurer may not release any withheld funds to the 1st class city under par. (a) unless the 1st class city delivers to the insurer and the named insured an itemized statement of the actual costs incurred under par. (a) 1. to 4.

632.103(2)(c) (c) The insurer shall promptly deliver to the named insured and other interests named in the policy any portion of the withheld funds that are not released to the 1st class city under par. (a).

632.103(3) (3) Release to named insured. Except as provided in sub. (2), the insurer shall promptly deliver to the named insured and other interests named in the policy the funds withheld from the named insured’s final settlement under s. 632.102 (2) if the 1st class city delivers a notice to the insurer that the building inspection official of the 1st class city, or other person who is authorized by the 1st class city’s governing body to represent the 1st class city, has inspected the insured real property and verifies any of the following:

632.103(3)(a) (a) That the damaged or destroyed portions of the building or other structure with respect to which the funds are withheld have been repaired or replaced in compliance with applicable building and safety standards, except to the extent that the withheld funds are needed to complete repair or replacement.

632.103(3)(b) (b) That the damaged or destroyed building or other structure with respect to which the funds are withheld and all remnants of the building or other structure have been removed from the land on which the building or other structure was situated and the site has been restored to a dust-free and erosion-free condition in compliance with applicable building and safety standards.

632.103 History History: 1989 a. 347; 1991 a. 32; 1993 a. 27; 1999 a. 150 ss. 663, 672.

632.104 632.104 Funds released to mortgagee.

632.104(1) (1) First mortgage in default. The insurer shall release to a mortgagee funds withheld under s. 632.102, in an amount and within the period provided in sub. (2), if all of the following conditions are satisfied:

632.104(1)(a) (a) The mortgagee holds a first mortgage on the real property with respect to which the funds are being withheld, and the mortgage is in default.

632.104(1)(b) (b) The mortgage was executed before March 1, 1991.

632.104(1)(c) (c) The mortgagee delivers to the insurer a written request for release of the funds within 15 days after delivery of the notice of withholding under s. 632.102 (3).

632.104(2) (2) Amount released; timing. If sub. (1) is satisfied, the insurer shall release to the mortgagee all or any portion of the funds withheld with respect to the mortgaged property as is necessary to satisfy an outstanding first lien mortgage of the mortgagee. The insurer shall release the funds within 10 days after receiving the request under sub. (1) (c).

632.104 History History: 1989 a. 347.

subch. II of ch. 632 SUBCHAPTER II

SURETY INSURANCE

632.14 632.14 Bonds need not be under seal. No suretyship obligation need be under seal unless a seal is required by the applicable federal law or law of another jurisdiction.

632.14 History History: 1975 c. 375.

632.17 632.17 Validity of surety bonds.

632.17(1) (1) Failure to file certificate. No instrument executed by an insurer authorized to do a surety business is ineffective because of failure to file the certificate of its authority to do business in this state or a certified copy thereof; but the officer with whom any instrument so executed has been filed or any person who might claim the benefit thereof may by written notice require the person filing the instrument to have a certified copy of the certificate of authority filed with the officer, and unless the copy is filed within 8 days after receipt of the notice the instrument does not satisfy the requirement that the instrument be supplied.

632.17(2) (2) Satisfaction of obligations to provide surety. An undertaking in appropriate terms issued by an insurer authorized to do a surety business satisfies and is complete compliance with any authorization or requirement in the law of this state respecting surety bonds, undertakings or other similar obligations, and shall be accepted as such by any official authorized to receive or empowered to require such an undertaking, subject to sub. (1).

632.17 History History: 1975 c. 375.

632.18 632.18 Rustproofing warranties insurance. A policy of insurance to cover a warranty, as defined in s. 100.205 (1) (g), shall fully cover the financial integrity of the warranty.

632.18 History History: 1985 a. 29.

632.185 632.185 Vehicle protection product warranty insurance policy.

632.185(1) (1) In this section:

632.185(1)(a) (a) “Vehicle protection product” has the meaning given in s. 100.203 (1) (e).

632.185(1)(b) (b) “Warrantor” has the meaning given in s. 100.203 (1) (f).

632.185(1)(c) (c) “Warranty” has the meaning given in s. 100.203 (1) (g).

632.185(1)(d) (d) “Warranty holder” has the meaning given in s. 100.203 (1) (h).

632.185(1)(e) (e) “Warranty reimbursement insurance policy” has the meaning given in s. 100.203 (1) (i).

632.185(2) (2) A warranty reimbursement insurance policy that is issued, sold, or offered for sale in this state shall meet all of the following conditions:

632.185(2)(a) (a) The policy is issued by an insurer authorized to do business in this state.

632.185(2)(b) (b) The policy states that the issuer of the policy will reimburse or pay on behalf of the warrantor all covered sums that the warrantor is legally obligated to pay or will provide the service that the warrantor is legally obligated to perform according to the warrantor’s contractual obligations under the provisions of the insured warranties sold by the warrantor.

632.185(2)(c) (c) The policy states that if the warrantor does not provide payment due under the terms of the warranty within 60 days after the warranty holder has filed proof of loss according to the terms of the warranty, the warranty holder may file for a reimbursement directly with the issuer of the warranty reimbursement insurance policy.

632.185(2)(d) (d) The policy provides that the issuer of the warranty reimbursement insurance policy has received payment of the premium if the warranty holder paid for the vehicle protection product covered under the insured warranty and that the insurer’s liability under the policy may not be reduced or relieved by a failure of the warrantor to report to the insurer the issuance of a warranty.

632.185(2)(e) (e) The policy contains the following provisions regarding cancellation:

632.185(2)(e)1. 1. The policy may not be canceled by the issuer until a written notice of cancellation has been mailed or delivered to the commissioner and the insured warrantor.

632.185(2)(e)2. 2. The cancellation of the policy does not reduce the issuer’s responsibility with respect to warranties that apply to vehicle protection products sold prior to the date of cancellation.

632.185(2)(e)3. 3. If the warrantor has filed the policy with the commissioner and the issuer cancels the policy, the warrantor shall do one of the following:

632.185(2)(e)3.a. a. File a copy of a new policy with the commissioner, before the termination of the prior policy, providing no lapse in coverage following the termination of the prior policy.