Conway

— Consistent with all of the out-of-state authorities which have considered the issue, in this case we hold an insured homeowner may recover the replacement cost of fire damage to an insured home by purchasing another home at another location. Accordingly, we reverse the judgment entered in favor of the defendant insurer.

Factual and Procedural Summary

The facts which give rise to this appeal are, in all material respects, undisputed. In November 1989 plaintiffs and appellants William Conway and Ken Whalen (Conway) purchased a house at 252 Daisy Avenue in Imperial Beach. Conway paid $230,000 for the house and subsequently rented it to tenants. Conway obtained $100,000 in fire insurance on the property from defendant and respondent Farmers Home Mutual Insurance Company (Farmers).

On March 11, 1990, the house was damaged by fire. Although the house could have been repaired, Conway decided not to make any repairs because Conway believed it made more economic sense to develop the Daisy Avenue parcel in conjunction with development of an adjacent parcel Conway owned. Instead of repairing the damage on Daisy Avenue, within three months of the fire Conway paid $230,000 for…