Garan recently obtained summary judgment on behalf of an insurer in a property loss case filed by its insured. The insured’s building, originally constructed in the 1970s, had collapsed under ice and snow. The insurance policy provided for replacement cost, meaning the cost of replacing the original structure with like kind and materials. A separate endorsement provided an additional $100,000 to cover additional construction costs required by the modern building code. Unfortunately, the code compliance costs greatly exceeded the $100,000 endorsement limit. The insured did not claim the policy said anything differently but rather claimed that as a result of a longstanding relationship in which the insurer provided input as to coverage limits, a special relationship existed which imposed a duty on the insurer to advise the insured that its code compliance coverages were insufficient.
The United States District Court in the Western District of Michigan, Northern Division (in Marquette, MI) granted the insurer’s motion for summary judgment, holding that no special relationship existed and even if one did there was no evidence the insured relied on any information the insurer had provided.
The case was handled by Garan Shareholders Timothy Jordan (of our Detroit, MI office) and Peter Worden (Traverse City); the motion was written by Associate Christine Mazzara (Detroit, MI) and argued by Mr. Worden.
Have questions regarding coverage under an insurance policy? Email Garan’s Insurance Coverage Analysis & Practice Group at insurancecoverage@garanlucow.com, and a member of our team will be in touch with you within 24 hours.