Most insurance is based on replacement cost which is the estimated cost to rebuild the property in the event of a claim.The easiest way to get your questions answered is to talk to a knowledgeable agent!

Equalling around 105k, definitely a tear down and rebuild property in a neighborhood where the ARV would be roughly 150-200k.

I will chime in, I do know a investor who bought in K.C.M.O, 20 st and   Broadway zip code 64108, took on some  huge old houses turned them into apartments   they are  all are rented getting top dollar  .They are  rebuilding and   young hipsters are  moving in it seems to be expanding  .They have loft apartments  being made out of a huge old buildings they  are sold out before  finished ..That are rolling out street cars for downtown that helps big time!!

Since Japan is susceptible to earthquakes, typhoons, fires, and previously wars, the culture for home ownership and rebuilding is not there as it in US and EU cultures.

You can also take a further deduction for rebuilding your now-depleted reserves, but that has to be over a reasonable period of time as well.So you will be paying tax on ordinary income to the extent you pulled money out of the (properly established and safeguarded) reserve account less the amortized expense and a smallish deduction for that year’s contribution to rebuild reserves.

They're not afraid of doing grunt work to rebuild their lives here, if we let them.

I would rather spend the money for a different insurance policy that would insure full rebuild cost.

Do you think they can do a total tear down and rebuild? 

@Omosalewa Aderonmu, I was about to start building one and then thought I should check out the BP forum assuming I don't need to rebuild something others have.

No different than any other natural disaster... hurricanes in Florida, wild fires in California, Volcanoes in Hawaii, etc.Regardless, your property insurance will rebuild your house if it is hit by a tornado... so ultimately there is no reason to avoid the area because of that risk in my opinion.