Replacement Cost Options

June 12, 2018

I'm working with an attorney on a fire claim and the policyholder has a commercial policy in place, the building is deemed a total loss and the insured has been paid the ACV. The insured had a bar/restaurant that burned and now he wants to rebuild a bed and breakfast instead. We have determined by using several contractors that the cost to rebuild a similar sized bar/restaurant with like, kind and quality would exceed the limit of insurance. Now the insured wants to rebuild a bed and breakfast instead again using a similar sized building with the same type of construction. My question is “can the insured collect full replacement cost provided he builds a like kind and quality building even though it would be used for a different type of business?” If you can help me decipher this coverage issue by use of the FC&S please get back to me.