The city of St. Louis is working to address a controversial ordinance that could leave tornado victims without their full insurance payouts. Currently, the ordinance requires insurance providers to send 25% of claim checks to the city’s escrow account, rather than giving the full amount to policyholders.
Mayor Cara Spencer told Spectrum News that officials are working with the Missouri Department of Insurance to develop a remedy for this issue, anticipating a solution within days. The ordinance was originally enacted to prevent property owners from collecting insurance money and abandoning damaged properties. However, this has created an unintended consequence for recent tornado victims.
“We are working as quickly as possible,” Spencer said. “We do anticipate having a path in the coming days to remedy that and ensure we are getting all available funds in the hands of tornado victims.” The city’s solution is expected to be specific to the geographic area affected by the tornado.
Spencer emphasized that residents should continue documenting and filing their claims as usual, as insurance payouts take time and the remedy is expected to be in place before payments begin. “That is a top priority for us to get that ironed out in the next few days. So, I wouldn’t worry about it. I would proceed as normal as a property owner, recognizing we will have a remedy for you very soon.”
The ordinance has been effective in holding property owners accountable for damaged properties. According to Spencer, it has prevented owners from abandoning their properties after receiving insurance payouts. “These laws have been very effective at protecting the community from property owners who walk away from total properties, leaving the community to deal with the rubble,” she explained.
However, a veteran home insurance agent with over 40 years of experience expressed concerns about the ordinance, stating it’s unprecedented for government entities to take a portion of insurance payouts. “I don’t see how any level of government is entitled to collecting a portion of what you paid in premiums to cover your house,” the agent said. “That dog don’t hunt.”
The city aims to balance protecting community interests with ensuring tornado victims receive their full insurance benefits. The proposed remedy is expected to address the current issue while preserving the ordinance’s original purpose.
