been leading the court to believe but liability for an admittedly covered loss to property insured under a replacement cost insurance policy it does not involve d coverage because as i stated the watch was covered and it was  insurance both the michigan courts and the federal courts and recognize that under michigan law co insurance conditions is one of those valid and permitted restrictions i'm insurance it also does not involve d anything regarding so called baseline actual cash value coverage while the fire insurance statute says that fire insurance maust at a minimum provide coverage for the actual cash value covered property the contract in this case provides much greater coverage than the actual cancer value it actually assuming that the insured complies with policy conditions provides for coverage to the extent of the replacement cost without depreciation so it covers both it covers replacement cost why wouldn't cover both the words why wouldn't the insured have the option of choosing either for as a c v which is a lot less less coverage but you reimbursed less money or placement cost out which is a greater reimbursement both and i get a requirements you have to satisfy to get the full reimbursement ok to answer that question your honor we would look at the policy in whole policy states that it is valued on a replacement cost basis when that policy is purchased and physical loss or damage occurs to the property those are the terms of the contract that government the insured has an election a right under the replacement cost coverage to receive settlement on v basis but my client the insurer still remains liable under that provision for replacement cost coverage benefits so therefore the replacement cost policy inherently already covers the actual cash value of the property and in this case there is no dispute that that that amount of loss was paid question isn't that the question is whether or not the co insurance condition applies to reduce the v is like a baseline i'm not taking a stash or term but just as like a standard and replacement cost as an upgrade and i totally get the argument that if the insured wants to pursue under the upgrade under the replacement costs they have to be d insurance requirement but if they're not proceeding under their placement cost and are seeking less money which is you know less money in your pocket under the e c v that's their choice you seems i mean i may be contractions right but it seems a little odd to enforce the premium that's required a conscience that's required for that the premium level replacement cost insurance and that's not how the insured wants to proceed on this specific claim your honor i understand what you're saying but what you're what you're really saying is that you want to rewrite the contract and rebalance the equities out of fairness as opposed to what the contract actually said and what michigan law says regarding the construction of contracts including policies of insurance in this case the insured has a replacement cost policy when that's shown on the declarations the policy clearly states without exception for or any alternative that co insurance the value of covered property the time of loss is determined on a replacement cost basis and my client charges a premium to could have a valid claim and they could lose all of those rights for failing to file a sworn statement approval was within sixty days of the carrier's request the application of conditions and coverage in the measurement of will and coverage are distinctly different issues so we are we are talking about liability predicated upon the application of policy terms and conditions mr mayor let me let me see if i could ask you to look at it this way under we'll go back to the actual language of the let's assume that it is a replacement cost insurance policy is and what we're trying to figure out if i understand it right is what value  the valuation portion of that of the contract am i right about that well if they ask the question you have and you want me to address them let me answer i'm asking you is is does this case turn on what the what the i think you're saying the same think so your argument is that because it's a replacement cost policy there is a provision in the policy that i don't think anybody disputes what it says and that is that the words value replacement cost if you have a replacement cost os yes ok now that seems pretty straightforward it seems to me if you stop right there you win but is it also correct that under the policy you can submit a an actual cost claim and in fact that you it what you would normally do at the beginning because you can't get replace mccosker unless you replace or repair the claim that the insured can submit under the replacement cost coverage can be based on an actual cash value basis ok so that's a stop right there so under and under what really happens under the policy even though value for one purpose means replacement cost if you submit an a v see claim value is actual cost value right and the insurers liability based upon the claim submitted would be based on actual care so in other words even though the one paragraph in the policy says value means replacement cost the way the policy actually operates value can still need something else even though it's been redefined  replacement cost it can still mean something else a b c if you submit an a b c claim right no not when the replacement cost is shown in the declarations so ok so if you submit an a b c claim then what you get us replacement cost i argument it seems like the policy says value means replacement cost but for other purposes it means something else so once it can meet once the same word can mean two different things depending on what type of a claim you file then it seems to me the policy then becomes ambiguous in the insured wins so just i just want to give you the opportunity to have the benefit of that thinking whether it's right or wrong and then be able to tell me why that's wrong i believe that it's wrong your honor because the replacement cost coverage applies at when they're applied to cover the value of covered property as set forth its replacement cost and that when the insured elects to take an e c v settlement the actual valuation is set forth within their and they still retain the right to receive the replacement cost benefit claim if they perform those missions and if that is the case my client remains why a bill for that even though they have made in the national request for payment and basis so why doesn't so why don't we use a b c value and apply the co insurance requirements that at that point when it's how is practically works if if i do the replacement cost policy the insured has to sometimes make up a difference i guess make up a gap in terms of the  replacement cost of what you're paying cash or place a building and if they can't do that and you can't if they don't have that money they can't actually replace the building so you're in that instance they just get the e c v value  and therefore it applies to all claims and for example while property supports that type of analysis because the policy provided a t v coverage and required r c d coverage as well insurance or they don't have to be or identical and it applies to all those seats and i believe that the howard industry cases that i cited is is directly on point while the language is different it's it's the same placement cost is used to determine the value covered property at the time  and in this case just like howard hughes shirt is the one under insured property by at least and i believe that policy is in force would result in the application co insurance to the well the the difficulty with this argument is that it it disregards the language of the policy actually and it also disregards the fact that under michigan law actual cash value recovery on an  cash value basis is mandatory recovery on replacement cost basis is optional and the policy itself redundantly says that replacement cost recovery is optional it says it in the may still recover on an actual cash value basis and then it goes on to say that it really matter if it's that recovery of optional replacement coverage that uses the word optional coverage you it requires two conditions one you have to notify the company within one hundred and eighty dollars days after the loss but you intend to proceed on a replacement cost basis into you have to actually use judgment since you have to actually repair optional and it is the policy holders election whether to proceed on an actual cash value basis or replacement cost basis and the policy says that you recover under an actual cash value basis unless b requirements for replacement cost recovery are triggered how can that create an argument supporting his position if you accept prime ones argument your honour's you're saying that even though the policy unambiguous he states that in an actual back cash value plane value is determined on an actual cash value basis he's saying no no no even if you proceed to an actual cash value basis value is determined not a replacement basis and is the court in body being one for correctly states that argument it vitiates actual cash value recovery and it would subject the client here we have a commercial property owning policyholder in the city of detroit purchased this policy believing and understanding based on the language of the policy i have two options i can recover on an actual cash value basis or i can largely what what you've just said you seem to be saying that the policy can't be drafted to say that co insurance reach that the co insurance requirement applies to a characterizing our argument as an attempt to invalidate co insurance provisions judge mckee we are not making that argument we are concede that co insurance clauses are valid and we are conceding at least for the plane was raised big were free to do that but they did not do that here and i would point out that in well they need they say that they did they say that by by putting a paragraph in the policy that says in the val if you tell us why that argument is not correct that argument is not correct because the d same section of the policy section she says twice that replacement that's not mean that they're only basis of valuating the last replacement cost even if you're only sticking to recover under an actual cash value basis your in order to accept mr meyers argument st of all you practical matter what what doesn't make total sense to me and that is if you buy a college a policy and will use your language that has replaced not cost option it's clear under the policy that that if you choose to exercise the replaced not cost option that you had to have adequate co insurance based upon the replacement cost no question about that right there's no question about that so why would somebody purchase a policy and pay the extra money to have that option and that's if you're correct and that's how to referred to college but then not maintain the the net the prerequisite co insurance i'm out to be able to then utilize said option if you chose down the road why would anybody do that well there could be a number of reasons st of all just let me give me one that makes sense someone could have just made improper maff calculation they could have gotten in correct advice about the adequacy of their coverage they could have made a decision that remember we're not here where we're not here and we're replacing the cost claim has been made we're here only there is no reduction there is no penalty that it wouldn't be stipulated facts in the trial were presented beyond the question you were going to give me an example of why somebody would do that i just and your example was well maybe they made a mistake it just i'm just curious is also could have been a decision by the client i'm going to answer your question in a nd the st is there could have been just a mistake or a misjudgment of the amount of coverage a lot of people a lot of people take out insurance and then their property cruised and they don't by the insurance company quite awesome if they believe that the amount of coverage that i have purchased is inadequate based on what they determine to be the replacement cost was and i'm just curious was there any communication this was never discussed this was never part of the discovery and by the way under michigan law under the hearts case an insurance agent has no duty to buy or take the current action to advise the client regarding the adequacy of property it is up to the client entirely to make a determination about what to buy and how much coverage the other question the other interview question knows it could be a situation where grand trunk told me to meet a determination that they believed in reading the policy but if we make an actual bet cash value claim there is no co insurance penalty and so we're covered and we're not here on a replacement cost play still you're you're you're out or you're proceeding under perhaps inaccurate assumption that damage to the building was seven hundred and twenty three thousand dollars and if you had good case i guess not but i really want to ask if you had submitted a replacement cost claim wasn't this human cost the insurance company you want to point three million right but there has not remember the ok and all of the case law is on our side thank you well as i just said i don't and you got better mr poston but obviously just please pay attention when the lawyer the judges are trying to talk to just listen to their questions and let them talk as those are important to you and you are trying to be so thank you for your time and will go back over the i apologize let me address the actual cares filling placement class value replacement cost necessarily includes actual cash value for purposes of this case replacement cost i'm sorry actual cash value is replacement cost minus depreciation so any coverage under the replacement cost policy inherently includes coverage for a c v coverage is is not in controversy here there was a fire loss it's a covered peril it caused direct physical loss to the property and it's not excluded that ends the coverage analysis the issue is what effect does a violation of policy conditions have on the insurers liability we agree and and the loss was adjusted based upon the actual cash value that mr fulkerson advised the court then we applied the condition it's that can  system where your encouraging you would are you leaving courage enough to pursue that and their place because you want to suss this penalty for a c v what is going to cost you a lot more money at the end of it at the end of day to pay the replacement costs st of all we are just trying to enforce the contract as written to define actual cash value when you have replacement cost coverage and the valuation flaws replaces actual cash value with replacement cost the reason being that actual cash value is not the find in the policy and so when you have replacement cost coverage that definition replaces the actual cash value as a method injury of measurement under the evaluation can i understand that but another reading would be that they get there they get the cd and if they want to go  amount which you typically i wouldn't want to normally pay more but if they want to go for that amount and you and you apply the penalty and they get less than they would have at the if they proceed into the market like if i may be placement cost election defines measurement of their recovery actual cash value there is no need to amend or retrieve vice the valuation condition because the cost value intellect actual cash value and that is self defined within the election under the replacement cost coverage there is no base actual cash value public and if the insured makes a mistake they suffer the consequences it's not a penalty for example if they don't take out enough on the record but did the insured pay more money to have the replacement cost in the record and i honestly can't address that but i do want to address this before i run out of time if this policy form can be issued and an actual cash value basis without replacement cost in which case all insurance is determined on actual cash value placement class minus depreciation and if the insured does not ensure that property the percentage required it will suffer what you're labeling a penalty and  receiving policy but this is an r c v policy and therefore the conditions and the terms and that provision of the policy govern and there is no exception and no exclusion or modification of  subsection a which replaces actual can has value with replacement cost is the value of covered property at the time of loss value hanging in it's own in an unmodified as mr focus and wants to argue is not the appropriate value it is not the appropriate circulation value modifies covered property at time of loss and when they select replacement cost coverage it's clear they have to insure the property to ninety percent of its replacement cost value or they violate the