Circuit Court LC No. 15-028647-CK
Before: Murphy, P.J., and Kelly and Swartzle, JJ.
Farm Bureau General Insurance Company of Michigan (Farm
Bureau) insured real property owned by plaintiff
Batton-Jajuga, and the property was destroyed in a fire.
Batton-Jajuga had indemnification coverage as well as
replacement-cost coverage. When she attempted to replace her
destroyed property with different property purchased with a
land contract, Farm Bureau refused to pay any replacement
costs. Farm Bureau claimed that Batton-Jajuga's interest
in the new property was less than a fee simple and therefore
was not a "complete" replacement.
Bureau breached the insurance agreement by refusing to pay.
While a vendee to a land contract does not immediately
acquire a full fee simple in the real property, the vendee
does become the equitable owner of the property when the
contract becomes effective, and this was sufficient under the
law and the parties' agreement. Accordingly, we affirm
the trial court's grant of summary disposition to
relevant facts are not in dispute. Farm Bureau insured
Batton-Jajuga's real property located in Monroe, Michigan
up to $289, 000. The parties' agreement included two
types of property coverage: (1) indemnification up to the
depreciated value of the property (i.e., the actual cash
value); and (2) replacement-cost coverage (i.e., the full
cost of repair or replacement above the actual cash value).
With respect to replacement-cost coverage, the parties'
agreement provided in pertinent part:
5. Loss Settlement. Covered property losses
are settled as follows:
* * *
b. Buildings under Coverage A or Coverage B at replacement
cost . . . subject to the following:
(1) If, at the time of loss, the amount of insurance in this
policy on the damaged building is 80% or more of the full
replacement cost of the building immediately before the loss,
we will pay the cost to repair or replace, after application
of the deductible and without deduction for depreciation, but
not more than the least of the following:
(a) the limit of liability under this policy that applies to
(b) the replacement cost of that part of the building damaged
for like construction and use on the same premises; or
(c) the necessary amount actually spent to repair or replace