Let’s say the condos are worth $10 million and the land is worth $6 million. The insurance company would only pay $4 million to fix, less the deductible. If the repairs needed would cost $7 million, the insurance company would pay the condo owners $10 million, less the deductible, tear down the condos, sell the land for $6 million and have a loss of $4 million which is less than the cost of repairs of $7 million.
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