Insurance policies have a way of teaching hard lessons long after the premiums are paid. A recent Sixth Circuit decision, Piatt Lake Bible Conference Association v. Church Mutual, 1 is one of those cases that should be required reading for every policyholder, property manager, and insurance agent who ever uttered the phrase “replacement cost coverage” without finishing the sentence.
The dispute centered on a familiar and often misunderstood coverage: Ordinance or Law. Most people simply call this code upgrade coverage. The Miracle Building, constructed in the early 1970s, collapsed under the weight of snow and ice. There was no dispute about coverage for the loss itself.
The problem arose when the cost to rebuild to modern building codes far exceeded expectations. The policy contained a $100,000 sublimit for code compliance. The actual code upgrade costs were alleged to be more than $1 million beyond that.
The policyholder did not argue that the policy language was unclear. Instead, it claimed that Church Mutual’s representations over the years led it to believe it had “full coverage,” including whatever code upgrades modern construction would require. That strategy failed under fairly conservative Michigan insurance law.
The court’s analysis followed a rigid but predictable framework. Under Michigan law, insurance relationships are contractual, not advisory. Unless a “special relationship” exists, agents and insurers have no duty to volunteer advice about the adequacy of coverage. Saying “you’re fully covered” is not enough. Asking general questions about replacement cost is not enough. Feeling reassured after a meeting is not enough.
The court looked closely at every interaction the policyholder relied on. A marketing brochure promising risk analysis did not matter because there was no proof that it was read. The insured’s own witness understood emails discussing replacement cost to mean rebuilding the same building as it existed, not to current code. A later meeting produced no remembered statements, only a sense of comfort. Courts do not enforce comfort. They enforce evidence.
But the most decisive factor was also the most basic one. The policy was clear. Ordinance or law coverage was capped at $100,000. Michigan courts are very conservative on this point. If the written policy unambiguously limits coverage, reliance on contrary oral statements is deemed unreasonable as a matter of law, especially when the insured admits they never read the policy.
That admission about not reading the policy doomed the case. Despite nobody ever doing it, and even when they do, few understand their policy, Michigan law presumes policyholders read their policies. When they do not, Michigan courts are not inclined to rescue them from assumptions that could have been corrected with a few minutes of review and a pointed question to the agent.
Code upgrades are not replacement cost. They are an add-on. They are limited. They are also among the most common and expensive coverage gaps in modern property losses.
I have seen this play out repeatedly after fires, hurricanes, and building collapses. The building is old. The code is new. The delta is enormous. And everyone is shocked that the replacement cost coverage is not actually covering the costs needed to replace per the new building codes.
The lesson is clear. Never assume. Never rely on vague assurances. Ask direct questions about any gaps in coverage that are needed to rebuild the property. Agents should explain the consequences before the loss, not after the denial. Replacement cost without adequate code coverage is a promise with an asterisk, and that asterisk can cost millions.
Thought For The Day
“The difficulty lies not so much in developing new ideas as in escaping from old ones.”
— John Maynard Keynes
1 Piatt Lake Bible Conference Association v. Church Mutual Ins. Co., No. 25-1689, 2026 WL 93224 (6th Cir. Jan. 13, 2026).
