Although she could buy a similar home in the same neighborhood for 250,000, it would currently cost500,000 to replace Amy's house if it were totally destroyed by a fire. What does Amy's homeowners policy cover?
1) The cost to buy a similar home in the same neighborhood
2) The cost to replace Amy's house if it were destroyed by a fire
3) Both the cost to buy a similar home and the cost to replace Amy's house
4) None of the above