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Village opts for fire insurance withholding

by David Fleet

February 15, 2012

Goodrich- On Monday night, the village council voted 4-0 to pass a resolution that would withhold village residents' insurance money in escrow from casualty losses including fire or explosion to repair, replace or remove damaged structures that may violate local codes. Councilmember Mike Baldwin was absent.

Council President Richard Horton said the fire insurance withholding program is designed to protect the community.

"The program will make sure the owner of a home will follow through with the claim," he said.

The village designated Chase Bank to hold the escrow money.

Atlas Township is considering a similar program.

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. Goodrich has about 1,800 residents. For residential property, the 25 percent settlement shall not exceed the annually adjusted amount of $7,873.

About 500 municipalities statewide currently utilize the fire insurance withholding program including the City of Davison, which implemented the program in 1997.

"We've used the program twice in the last five years," said Andrea Schroeder, Davison City Clerk.

"The program did what it was intended to do. In one of the fires the home was demolished. With the other structure, there were some repairs done. We held onto the money until it was taken care of—it's really for the good of the community."