Two questions are presented:

(1) Whether an insured can recover under a replacement cost provision of a fire insurance policy without actually repairing, rebuilding, or replacing the property at the same or another site. We conclude that, although the insurer denied coverage on the grounds that the fire was caused by the insureds and they had committed fraud in reporting the loss and the jury found the fire was not caused by the insureds and there was no fraud, the insureds must nevertheless actually repair, rebuild, or replace at the same or another site before the insurer becomes liable to pay the difference between actual cash value and replacement cost.

(2) Whether the circuit judge erred in ruling that the insurer may not introduce evidence of the financial condition of the insureds to show motive or for any other purpose. We conclude that although evidence of the financial condition of an insured may, in particular cases, be admissible to prove motive or for other purposes, the judge did not err in ruling that Michigan Basic could not, in *184the instant case, introduce evidence of the financial condition of the Smiths.

i

Elmer and Myrtle Smith insured their home in Trenton, Michigan, with the Michigan Basic Property Insurance Association against fire loss. The policy provided for replacement cost coverage on the home with a policy limit of $56,000.1

The Smiths’ home and its contents were completely destroyed by fire. Michigan Basic claimed that the Smiths had deliberately set the fire, and that they had committed fraud in reporting the loss. When it appeared that the home would not be repaired, the City of Trenton demolished what was left of the structure. The Smiths commenced this action in circuit court.

Before trial, the Smiths moved for a determination whether, in the event of a favorable verdict, they would be allowed to recover the replacement cost of the home not exceeding the $56,000 policy limit instead of the stipulated $7,500 actual cash value.2 Michigan Basic contended that it was obliged to pay only the actual cash value of the home in the event the Smiths obtained a favorable verdict with regard to the arson and fraud issues, because the Smiths had not completed repair or *185replacement of the home as both the policy3 and the statute4 require.

*186Observing that the arson and fraud allegations would have made it extremely difficult for the Smiths to obtain financing to rebuild the home, the judge ruled and later entered an order that, in the event the Smiths obtained a favorable verdict, they were, pursuant to Pollock v Fire Ins Exchange, 167 Mich App 415; 423 NW2d 234 (1988), "entitled to recover the full replacement cost value of their home not to exceed policy limits without first having to repair or replace same.”

The judge also entered an order in limine directing that "pursuant to the holding of People v Henderson, 408 Mich 56; 289 NW2d 376 (1980),” Michigan Basic "shall not introduce any evidence of plaintiff Elmer and Myrtle Smith’s alleged poverty, dependence on public welfare, unemployment, underemployment, low paying or marginal employment to show motive or for any other purpose . . . .”

The jury found, in a special verdict form, that the fire was not deliberately set, that the Smiths had not deliberately set or caused the setting of the fire, and that the Smiths did not know of and consent to the setting of the fire for the fraudulent purpose of attempting to recover under the policy issued by Michigan Basic. The jury also found that the Smiths had not misrepresented or concealed any material fact or circumstance concerning the *187cause or origin of the fire, the value of the insured property, or the extent of loss and damage sustained. The jury further found that Michigan Basic had not "wilfully denied the Plaintiffs’ claim with a callous disregard for the Plaintiffs’ rights under the policy.”

The Court of Appeals5 vacated and remanded for a new trial, stating that the judge should have allowed inquiry concerning the Smiths’ financial condition'but affirmed the judge’s ruling that the Smiths could recover the replacement cost of the home without actually having repaired or replaced it.6 As earlier stated, we disagree with the Court of Appeals on both questions.

We remand this case to the circuit court with the direction that the judgment for $90,607.92 entered in favor of the Smiths be modified to require the payment, without regard to whether they actually repair, rebuild or replace the home, of $42,107.927 8plus interest, and to require an additional payment of an amount not exceeding $48,500® plus interest when and if the Smiths actually repair, rebuild or replace the home.

ii

Michigan Basic introduced expert testimony *188tending to show that the fire resulted from the ignition of flammable liquids and had been deliberately set, and additional expert testimony that there was no evidence indicating that the fire was accidental. Still another expert witness, for the Smiths, testified that he believed that the fire was caused accidentally by a short circuit in the wiring leading to a refrigerator. The state police were unable to find evidence of a flammable substance on testing samples taken from the home.

The Smiths purchased the two-story, single-family residence for approximately $6,500 in 1973, over thirteen years before the fire. After they purchased the home, the City of Trenton rezoned the property for commercial use. Only two houses remained on the Smiths’ block at the time of the fire. Approximately fifteen to twenty other structures in the neighborhood had been removed between the purchase of the home and the time of the fire.

Michigan Basic introduced evidence tending to show that the home was in a state of disrepair. A Trenton housing inspector testified that inspections beginning in 1975 revealed code violations, including electrical and plumbing problems. The Smiths were informed of the need to obtain an electrical permit before the violations were corrected. The Smiths did not, however, obtain the required permits and the code violations had not been corrected before the fire. Additional code violations were observed in an April, 1986, inspection.

In March, 1987, a Trenton inspector notified the Smiths that he intended to enter the property and conduct a more extensive inspection. The inspection was delayed for a short time at the request of the Smiths to allow them time to make repairs. *189Elmer Smith fixed a broken water pipe, and was in the process of installing a new linoleum floor.

The fire occurred on the day before the rescheduled inspection, while the Smiths and their children were visiting relatives in Hesperia, Michigan, over four hours driving time from Trenton.

hi

We agree with Michigan Basic that it is not liable for the difference between the $7,500 actual cash value of the home and the $56,000 replacement cost policy limit unless the home is actually repaired, rebuilt, or replaced, and that Pollock should not be followed.

The fire insurance policy provides that the insurer will pay no more than the actual cash value of the damage unless "actual repair or replacement is complete.”9 The statute10 provides that there shall be no liability on the part of the insurer under a replacement cost provision "unless the property damaged is actually repaired, rebuilt or replaced at the same or another site.”

The Smiths rely on Pollock, McCahill v Commercial Union Ins Co, 179 Mich App 761; 446 NW2d 579 (1989), and Zaitchick v American Motorists Ins Co, 554 F Supp 209 (SD NY, 1982), aff’d without published opinion 742 F2d 1441 (CA 2, 1983). Michigan Basic contends that Pollock, McCahill, and Zaitchick were incorrectly decided, and in all events are distinguishable because the jury found that Michigan Basic had not wilfully denied the Smiths’ claim with a callous disregard for their rights, while in Pollock the Court found "lack of *190good faith processing”11 of the insured’s claim and in McCahill the Court followed Pollock "under the facts of this case” which included a finding of "extreme and outrageous conduct” by the insurer.12

We agree with Michigan Basic that where the insurer asserts in good faith a defense of arson or fraud, the insured is not automatically entitled to payment of replacement cost following a jury’s rejection of those defenses. Although, as stated in Zaitchick, supra, p 217, "a bank would be chary to lend money on the basis of an unlitigated law suit in which the defendant and its vast resources intend to present several defenses to payment,” and, thus, we agree with the Smiths that they could not be expected to repair, rebuild, or replace while this litigation was pending, once it has been determined that they are entitled to payment of actual cash value without regard to whether they repair, rebuild, or replace, and to replacement cost if they do so, the insurer’s interposition of arson and fraud defenses no longer stands in the way of lender-assisted financing of repair, rebuilding, or replacement.

The insurance policy provides that the insured may disregard the replacement cost provision and make claim for actual cash value, and then make claim within one hundred eighty days after loss for an additional payment on a replacement cost basis.13 The Supreme Judicial Court of Maine, *191construing the same language, said "[t]here is simply no support for the company’s argument that the obligation to make a claim imposes the requirement that the replacement building must be 'substantially complete’ at the time the claim is made,”14 and that where, upon the conclusion favorably to the insured of litigation concerning the amount the insurer was required to pay under a replacement cost provision, the trial court did not err in allowing the insured "a year from the date of judgment to replace the home and incur replacement costs.”15

While Michigan Basic’s unwillingness to recognize the Smiths’ claims may, as a practical matter, have disabled them from undertaking the repair, rebuilding, or replacement of their home, following the conclusion of this litigation, rejecting the claims that the fire was caused by arson or that there was fraud in reporting the loss, the Smiths’ interest in obtaining payment of replacement cost can be protected without estopping the insurer from requiring actual repair, rebuilding, or replacement as required by the insurance policy and the statute.

The policy limits Michigan Basic’s liability for replacement cost to the lesser of three amounts: (a) the policy limit, (b) the replacement cost for "like construction and use on the same premises” (em*192phasis added), or (c) the amount actually and necessarily spent to repair or replace the damaged building.16 The statute permits repair, rebuilding, or replacement "at the same or another site.”17 Cases in other jurisdictions hold that the "for like construction and use on the same premises” language only applies to the second of the three loss settlement alternatives,18 and that actual repair or replacement is allowed other than at the site of the loss.19

IV

Michigan Basic sought to introduce evidence of the Smiths’ financial condition both to show motive to set a fire and to show that they committed fraud in reporting the loss.

A

In ruling that Michigan Basic "shall not introduce any evidence of Plaintiff Elmer and Myrtle *193Smith’s alleged poverty, dependence on public welfare, unemployment, under employment, low paying or marginal employment to show motive or for any other purpose,” the judge relied on this Court’s decision in Henderson, holding that it was not error to permit cross-examination of defendant Henderson20 concerning his financial condition.

This Court said that it agreed with the statement of the New Jersey Supreme Court that "there must be something more than poverty to tie a defendant into a criminal milieu,”21 and the statement of the United States Court of Appeals for the District of Columbia Circuit that "[w]here the evidence elicited only demonstrates that the defendant is 'poor,’ the inquiry is improper,”22 adding: "[tjhere is a need to avoid undue prejudice in individual cases and to prevent establishment of a 'two-tiered standard of justice’ weighing more heavily on the poor. And we recognize that evidence of a defendant’s financial condition, because it ordinarily has limited probative value and usually goes to a collateral issue, will often distract rather than aid the jury.”23

The Court explained that its decision reversing the Court of Appeals did not "allow 'routine use’ of evidence of financial condition.” The prosecutor’s proofs "rather than showing unemployment, established that Henderson was not only employed, but held a managerial position. The evidence that his electricity was shut off for non-payment, viewed in light of this evidence of employment, carried with it no suggestion that Henderson was 'poor.’ ’,24

*194This Court thus drew a distinction "between evidence of poverty and unemployment — evidence that a person is chronically short of funds — and evidence of the sort involved in this appeal, showing that a person is experiencing a shortage of funds that appears to be novel or contrary to what one would expect is typically felt by such a person.”25

Michigan Basic relies on decisions in other jurisdictions some of which are distinguishable from the instant case because, as in Henderson, there were circumstances indicating that there had been a deterioration in the financial circumstances of the person against whom the evidence was offered.26

*195Michigan Basic made no effort to show that there had been a deterioration in the Smiths’ financial condition. During the argument on the motion, the Smiths’ lawyer stated without objection that the "facts are undisputed that my clients, while not having high income also were not behind on any of their bills, were not in financial distress, were not under any pressure from any creditors or anyone else to pay money. But merely, they’re poor people.” They had nearly paid in full the mortgage on their home.

The only change in condition concerned the physical condition of the home, and the impending visit of the Trenton Housing Inspector, all of which was explored at the trial.

B

Also during argument on the motion, Michigan Basic’s lawyer said that he saw "the problem that *196the Court [in Henderson] is addressing there, and I can appreciate the problem,” and he was not seeking to ask the jury to conclude that the Smiths "burned the house down or committed fraud simply because they collect public assistance benefits and have for some degree of time.” He said he sought primarily to introduce evidence of the Smiths’ financial condition to show that they had committed fraud in reporting the loss.

The Smiths had retained State Wide Claim Service to represent them in dealing with Michigan Basic. Katherine Anne Herzog, a licensed public adjuster employed by State Wide, testified that she was unable to inspect or inventory the personal property because of the extensive fire damage. Herzog prepared, with information supplied by Myrtle Smith, a twenty-three-page inventory of the items of personal property claimed to have been destroyed in the fire. The inventory listed a replacement cost of the personal property damage of $41,841 and an actual cash value of $26,061.27

Michigan Basic contends that an examination of the inventory reflects that the Smiths claimed to have acquired well in excess of $5,000 of personal property within the two years immediately preceding the fire,28 and that evidence of their financial condition would be probative of the issue of fraud in reporting the loss because such evidence would tend to show that it was improbable that the Smith’s had, in fact, acquired property in the amount claimed._

*197The inventories of personal property included property belonging to the five children. The two oldest were seventeen or older at the time of the fire. Myrtle Smith testified that some of the property was not new when acquired, and was acquired at garage sales, yard sales, porch sales, and moving sales. The judge’s ruling barring the introduction of evidence of the Smiths’ financial condition would not be an appropriate basis for disturbing the verdict.

Reversed and remanded to the circuit court for the entry of a modified judgment requiring payment, without regard to whether the Smiths actually repair, rebuild, or replace the home, of $42,107.92 plus interest, and to require an additional payment of an amount not exceeding $48,500 plus interest when and if the Smiths actually repair, rebuild or replace the home.

(concurring in part and dissenting in part). I write separately to state that although in my view the evidentiary error was harmless, I agree with the Court of Appeals that the trial court erroneously concluded that People v Henderson, 408 Mich 56; 289 NW2d 376 (1980), barred admission of plaintiffs’ tax returns for any purpose. The defendant did not seek to show generally that poor persons are more likely to commit arson than affluent people. Rather, there being other evidence of incendiary origin, the probative value of the specific evidence was its logical relevance to motive for arson and to fraud relating to personal loss. This Court has held that arson may be proven by circumstantial evidence, Peterson v Oceana Circuit Judge, 243 Mich 215; 219 NW 934 (1928). *198Motive plus access or opportunity may establish arson in a civil context, O-So Detroit, Inc v Home Ins Co, 973 F2d 498 (CA 6, 1992), and, as the lead opinion implicitly recognizes, the overwhelming weight of authority permits introduction of specific evidence of financial need in civil cases. See ante, p 191, n 15 and 19 Couch, Insurance, 2d (rev ed), § 79:573, pp 542-544.

This is not a situation in which a prosecutor is seeking to prejudice a defendant by suggesting that he is part of the criminal milieu because he is poor. The rationale of People v Henderson, supra, is that motive is of minimal relevance in a theft offense because greed and not need is the assumed motive for theft. Because one does not lightly destroy one’s home or business, the logical force of the relationship between need and deed is greater in the context of an arson. Even here, however, and even with respect to civil cases, it might legitimately be urged that financial need alone is not probative of arson.

What the lead opinion does not acknowledge is that this is not a case where the defense offers to establish arson from evidence of financial need alone. Here, there is other evidence of incendiary origin. The proof offered is specific and relevant to the plaintiffs’ financial motive.1

Finally, since judgment has entered for plaintiffs, the lead opinion’s observations are unnecessary. I would refrain from extending the dicta of *199Henderson, supra, until a case is presented in which it can properly be said that the effect of admitting the evidence unfairly prejudiced the plaintiff.