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AN ACT concerning cities; relating to the payment of the proceeds of
  fire insurance policies; amending K.S.A. 40-3901 and repealing the
  existing section.
Be it enacted by the Legislature of the State of Kansas:
  Section 1.  K.S.A. 40-3901 is hereby amended to read as follows: 40-
3901. (a) The governing body of any city is hereby authorized to establish,
by ordinance, a procedure for the payment of $5,000 or 10%, whichever
is less, not to exceed 10% of the 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 or explosion. The
ordinance shall apply only to a covered claim payment which is in excess
of 75% of the face value of the policy covering a building or other insured
structure.
  (b)  The insurer shall first shall pay all amounts due the holder of a
first real estate mortgage against the building or other structure pursuant
to the terms of the policy and endorsements thereto and then shall with-
hold from the covered claim payment the sum of $5,000 or a sum not to
exceed 10% of the covered claim payment, whichever is less, and shall
pay such moneys to the city to deposit into an interest-bearing account,
unless the city has issued a certificate pursuant to K.S.A. 40-3905, and
amendments thereto.
  (c)  The city shall release the insured's proceeds and any interest
which has accrued on such proceeds received under subsection (b) within
30 days after receipt of such moneys, unless the city has instituted legal
proceedings under the provisions of K.S.A. 12-1752, and amendments
thereto. If the city has proceeded under the provisions of K.S.A. 12-1752,
and amendments thereto, all moneys in excess of that necessary to comply
with the provisions of K.S.A. 12-1750 et seq., and amendments thereto,
for the removal of the building or structure, less salvage value, shall be
paid to the insured.
  Sec. 2.  K.S.A. 40-3901 is hereby repealed.
  Sec. 3.  This act shall take effect and be in force from and after its
publication in the statute book.