Michigan Compiled Laws

Mich. Comp. Laws § 500.2827 (2026)

Fire policy providing reimbursement for lost or damaged property; maximum liability; cash settlement; payment of amount in excess of actual cash value of lost or damaged property.

✓ current as of July 2026

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THE INSURANCE CODE OF 1956

Act 218 of 1956

500.2827 Fire policy providing reimbursement for lost or damaged property; maximum liability; cash settlement; payment of amount in excess of actual cash value of lost or damaged property.

Sec. 2827.

(1) An insurer may issue a fire policy, insuring property, by which the insurer agrees to reimburse and indemnify the insured for the difference between the actual cash value of the lost or damaged insured property at the time of the loss or damage, and the amount actually necessary to repair, rebuild, or replace the lost or damaged insured property to a condition and appearance similar to that which existed at the time of the loss or damage based on the use of conventional materials and construction methods which are currently available without extraordinary expense. The insurer's liability shall not exceed the amount of liability covered by the contract of insurance.

(2) The contract of insurance established pursuant to subsection (1) shall not preclude an insured from selecting a cash settlement based on the actual cash value of the lost or damaged insured property at the time of the loss or damage, but not to exceed the amount of liability covered by the contract.

(3) The contract of insurance established pursuant to subsection (1) may provide that there shall be no liability on the part of the insurer to pay an amount in excess of the actual cash value of the lost or damaged insured property at the time of the loss or damage, unless the lost or damaged property is actually repaired, rebuilt, or replaced at the same or another contiguous site. However, this subsection shall not apply if the amount of loss or damage to the insured property under the standards of subsection (1) exceeds the amount of liability covered by the contracts.

History: Add. 1979, Act 145, Imd. Eff. Nov. 13, 1979 ;-- Am. 1990, Act 305, Imd. Eff. Dec. 14, 1990

PopularName Notes:

Act 218

Notes of Decisions

Cited in 6 cases, 1989–2017 · leading case: McCahill v. Com. Union Ins., 446 N.W.2d 579 (Mich. Ct. App. 1989).

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McCahill v. Com. Union Ins., 446 N.W.2d 579 (Mich. Ct. App. 1989). · cites it 2× “Plaintiff, as support for his contention that he was not required to repair or replace his property in order to collect replacement costs, cites MCL 500.2827; MSA 24.12827. That statute provides as follows: (1) In consideration for adequate premium or premium deposit, riders or…”

Smith v. Michigan Basic Prop. Ins., 490 N.W.2d 864 (Mich. 1992). · cites it 2× “[6] The Court of Appeals did not advert to Pollock , and predicated affirmance on the replacement cost issue on a provision of the Insurance Code (MCL 500.2827[3]; MSA 24.12827[3]) not cited by either party at trial or on appeal.”

Debra Batton-Jajuga v. Farm Bureau Gen. Ins. Co. of Mi, 913 N.W.2d 351 (Mich. Ct. App. 2017). “Indeed, MCL 500.2827 expressly contemplates that replacement can be made at a location different from that of the insured property.”

Cortez v. Fire Ins. Exch., 493 N.W.2d 505 (Mich. Ct. App. 1992). · cites it 2× “” Thus, this policy is subject to § 2827 of the code, MCL 500.2827; MSA 24.12827, which addresses replacement-cost policies that require the insurer to rebuild or replace the lost or damaged property "to a condition and appearance similar to that which existed at the time of…”

Debra Batton-Jajuga v. Farm Bureau Gen. Ins. Co. of Mi (Mich. Ct. App. 2017). “Indeed, MCL 500.2827 expressly contemplates that replacement can be made at a location different from that of the insured property.”

Craft Rec. Co. LLC v. Home-Owners Ins. Co. (Mich. Ct. App. 2015). “2826 or MCL 500.2827, provisions of the Michigan Insurance Code, MCL 500.”

— Mich. Comp. Laws § 500.2827(3) — 1 case

McCahill v. Com. Union Ins., 446 N.W.2d 579 (Mich. Ct. App. 1989). “Plaintiff, as support for his contention that he was not required to repair or replace his property in order to collect replacement costs, cites MCL 500.2827; MSA 24.12827. That statute provides as follows: (1) In consideration for adequate premium or premium deposit, riders or…”

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