If Gail's new restaurant construction is damaged by a hurricane, which coverage could potentially pay to rebuild at replacement cost?

When considering which coverage would potentially pay to rebuild a restaurant at replacement cost after hurricane damage, the correct choice involves understanding the specific coverage options available in policies.

Replacement cost coverage is specifically designed to pay for the costs to replace damaged property without deducting for depreciation. In the context of a restaurant, if the building or its renovations are damaged by a covered peril, this type of coverage would allow for rebuilding or repairing the structure to its original state at current market prices.

Flood insurance, although crucial for covering property damage resulting from flooding (which can occur during hurricanes), typically does not include replacement cost for structural repairs; it often only covers actual cash value, which accounts for depreciation. Business income coverage, on the other hand, is intended to cover lost income during the time a business is closed due to covered damages but does not directly address the costs of physical rebuilding.

Given this context, the fact that replacement cost coverage allows for full reconstruction at current prices makes it the accurate choice for addressing the rebuilding needs in the event of hurricane damage. It is important to ensure that this coverage is included in a property insurance policy to protect against total losses effectively.