Man that's a code I've never heard of. You would think a code would be in place to help a homeowner no make building a pain to do what he needs in his own property. Scratching head.
Building codes are a good thing....Keeps home owners away from contractors doing terrible work and later the home owner has a big headache to deal with.
OP This fire sounds like a really bad one. Glad you and yours made it out safely. I can;t imagine loosing all my garage stuff. I just hope the insurance companies treat you and everyone else fairly. No advise about insurance companies.