A closure latch assembly for a motor vehicle closure system includes a power release mechanism and an inside handle release mechanism mechanically connected to an inside door handle. The power release mechanism is used to shift the inside handle release mechanism from a normally Disengaged operating state to an Engaged operating state. In the Disengaged state, the inside handle release mechanism is uncoupled from the latch release chain of components to prevent latch release via actuation of the inside door handle. In the Engaged state, the inside handle release mechanism is coupled for the latch release chain of components to permit latch release via actuation of the inside door handle. The power release mechanism only shifts the inside release mechanism from its Disengaged state into its Engaged state in the event of an emergency condition.