HUNTINGTON -- When a home is gutted by fire, it only seems logical that a part of the insurance money paid to the owner goes toward cleaning up the mess.

But in Huntington, that is rarely the case when it comes to rental property, city officials say. In many instances, the property owner pockets the insurance claim check, leaving the city to pay for the cleanup and neighbors to deal with problems that arise from living next to a charred structure.

"It's so ugly to look at," said Linda Farley, who lives two doors down from a duplex on 26th Street that was destroyed by fire almost three years ago. "It stinks so bad. The neighbors have to take turns cutting the grass out front.

"I'm just afraid that someone's going to get in there and set it on fire again."

Fire investigators discovered that the owner of the duplex had fire insurance. Though he made several promises to the city that he would tear it down, the duplex is still standing. As a result, the city will use precious community block grant dollars to pay a contractor to tear it down.

The city only has enough money to tear down 20-25 fire-damaged or dilapidated structures annually, a number that pales in comparison to the extent of Huntington's problems.

Fire-damaged structures are just one element of the city's aging housing stock. Housing inspectors last year condemned 62 homes, found 111 that required major code improvements and identified 47 that were fire-damaged. There likely are hundreds more that have not been inspected yet or are a couple years away from disrepair.

While city officials have struggled to find an answer for tearing down dilapidated homes, Fire Marshal Dave Bias and city attorneys have worked for more than a year on a solution for fire-damaged structures.

They are expected to introduce to City Council soon a proposed ordinance that calls on insurance companies to place a portion of the proceeds from a fire insurance claim in an escrow account. If the owner pays to tear down a fire-damaged property within a certain amount of time, the money in the escrow account would be returned to the owner. If the owner walks away from the property, the city would use the money in the account to pay for demolition.

The ordinance would go a long way toward holding insured landlords responsible for their fire-damaged property, Bias said.

"With your average owner-occupied fire, the owner will most likely use their insurance money to tear down and rebuild, because they need a place to live," he said. "With nonowner-occupied properties, it's a different story. There's much less incentive and urgency for them to use the insurance money to tear down the property or bring it up to code."

That worries Bias, especially when he reviews cases of the 69 structure fires that have occurred in Huntington this year. Seventy-seven percent of those fires have occurred in nonowner-occupied property.

The ordinance he and the legal department are preparing is modeled after a state law in Ohio. That law requires insurance companies to withhold $2,000 for every $15,000 of insurance payout when a damage claim exceeds 60 percent of the value of the insurance policy. The law takes effect only if Ohio cities choose to participate in the program. Nearly 200 cities and townships have signed up since the law was passed in the early 1990s.

"The program is a guarantee that the insured will do the right thing with their insurance money and not just walk away from their property," Ironton Fire Chief Tom Runyon said. That city has used the program for about 15 years.

Runyon did not immediately know how many times Ironton has used insurance money to tear down homes, but said the program has been a vital redevelopment tool.

"The amount of insurance money we are allowed to withhold under state law is usually much more than what it takes to demolish a fire-damaged house," Runyon said. "The property owners are pretty quick about tearing it down themselves."

There is no provision in state law similar to the city's proposed ordinance, meaning insurance companies would not have to agree to the legislation if they didn't want to, said Lynettte Maselli, a spokeswoman for the West Virginia Insurance Commission.

"Requiring insurance companies to set aside a portion of insurance proceeds for demolition would require action at the state level," Maselli said. "Having said that, we're willing to work with any municipality on any proposals when it comes to insurance."

"It's to the insurance industry's advantage to participate in a program like this," Bias said. "To an extent, it takes the arson-for-profit motive out of the picture when the property owner knows they will have to take care of their property after they burn it down."

Bias said the city's proposed ordinance might not be needed if insurance companies followed existing state law.

Some homeowner's insurance policies include coverage for debris removal after a fire. If the city tears down a property that is a total loss within six months of a fire, it can file a claim with the property owner's insurance company and get reimbursed for the demolition costs.

"But the insurance companies aren't notifying us when the policy has a debris-removal provision on them," Bias said. "Short of the fire marshal's office becoming full-time insurance agents, how are we expected to know when we can get reimbursed?"

State Insurance Commissioner Jane Cline said insurance companies are not required to notify the city, though she thinks the language in the law should be clarified. The law currently states that insurance providers "must notify the insured, and the municipality or county in which the structure is located, of any coverage" for debris removal.

However, the same law also states that official notification of the coverage only needs to be by letter to the property owner only.

Jill Bentz, president of the West Virginia Insurance Federation, said the answer is cleaning up inconsistencies in the state law and requiring insurance companies to notify cities and counties when they can be reimbursed for demolition costs.

State Farm already sends notification letters to local governments on a voluntary basis, she said. The company accounts for 26.4 percent of all homeowner's insurance policies in the state.

"I don't think the solution is a city ordinance," she said. "It would be extremely difficult for insurers to understand what their obligations are if cities throughout the state started adopting different ordinances."

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