Who has a claim to the insurance money
After a fire, the policy money doesn’t belong only to you. Three parties can have a stake before you see a dollar:
| Party | Why they are paid | How it shows up |
|---|---|---|
| Mortgage lender | Most lenders require being listed as mortgagee on the policy, per the NAIC | The lender’s name on the claim check |
| County treasurer | Delinquent taxes and assessments under R.C. 3929.86 | Paid from the claim before you receive it |
| City or township | Demolition, repair or securing fund in places that adopted R.C. 3929.86 | A share held until the house is dealt with |
What’s left goes to you under the policy terms. If you plan to sell, map out each of these early, because they decide how much the sale and the claim together will net.
The county treasurer’s certificate
Ohio adds a step most homeowners don’t expect. Under R.C. 3929.86, when the total recoverable under all fire policies on a structure in a municipality or township is more than $5,000, the insurer must get a certificate from the county treasurer before paying.
You request it in writing, with the property’s tax description and the date you and the insurer agree the proof of loss was received. The treasurer issues one of two kinds:
- A clean certificate: no delinquent taxes, assessments, penalties or certified removal, repair or securing costs.
- A certificate with a bill: listing what’s owed. The insurer pays those amounts directly from the claim proceeds.
So a house that was behind on taxes will have the back taxes taken out of the claim, not just out of the sale.
The 60% rule and the local demolition fund
The second R.C. 3929.86 step applies only in some communities and only to big losses. If the loss equals or exceeds 60% of the total limits on all fire policies covering the structure, and the city or township has adopted the procedure and filed it with the Ohio superintendent of insurance:
- The insurer transfers $2,000 for each $15,000 of the claim, or part of $15,000, to the local designated officer. That’s about 13% of the claim.
- If you submitted a contractor’s signed estimate for removal, repair or securing with your proof of loss, the insurer transfers that amount instead.
- The rest of the claim is paid to you, subject to the lender.
A worked example: a house insured for $120,000 has a fire, and the claim is $90,000. That’s 75% of the limits, above the 60% line. If the city has adopted the rule, the insurer sends $90,000 ÷ $15,000 = 6 × $2,000, or $12,000, to the city’s fund. A $97,000 claim would count as seven units, because a fraction of $15,000 counts as a full one, so $14,000 would be held. The remaining proceeds go to you and your lender. These figures are illustrations, not a quote; your adjuster calculates the real amounts.
The fund is security, not a fee. The city returns it once the house is repaired, removed or secured and you give proof, within 60 days. If the city had to do the work itself, its costs come out first and any balance is returned within 60 days. Insurers covered by the rule include the Ohio FAIR Plan.
Ask your adjuster whether your city has filed under R.C. 3929.86. If it has, plan how the house will be repaired, secured or demolished, because that releases the money.
Actual cash value versus replacement cost
The type of coverage decides how much you can collect without rebuilding. The NAIC defines the two common bases:
- Replacement cost: the cost to repair or rebuild without deducting for depreciation.
- Actual cash value: the cost to repair or replace after depreciation.
Many replacement cost policies pay the actual cash value first and the remaining depreciation only after the work is done. If you sell before repairing, you may collect only the first payment. Read the loss settlement section of your policy, and ask the adjuster in writing what you’ll receive if you sell unrepaired.
Sell first, claim first, or both at once
You don’t have to choose between claiming and selling, but the order affects the paperwork.
- Settle the claim, then sell: the cleanest path. You know your proceeds, the lender is paid from the claim and the sale, and the buyer prices the house as it is.
- Sell while the claim is open: possible, but write into the purchase agreement who receives the remaining claim payments. Ask the insurer whether the policy lets you assign post-loss proceeds to the buyer.
- Repair, then sell: collects full replacement cost, but takes the longest and means managing contractors.
Keep every document: the proof of loss, the adjuster’s estimate, the treasurer’s certificate, and any letter from the city about the R.C. 3929.86 fund.
Securing the house in the meantime
A fire-damaged house must be secured, and a city can step in if it isn’t. In Akron, the Housing Appeals Board hears cases on dilapidated and fire-damaged structures and has ordered utilities disconnected, structures secured, and in some cases demolition with the cost assessed to the property. Board up openings, shut off utilities you don’t need, and check whether your policy still covers the house once it’s unoccupied; see vacant house insurance in Ohio. If a demolition hearing is scheduled, read our guide to the Akron demolition order.
For the seller’s decision of whether to rebuild or sell as it is, see selling a fire or water damaged house. A public adjuster or attorney can review a disputed claim, and you can send us the address and the adjuster’s estimate if you’re weighing a sale.
