The insurance company is charging you by the $ thousands on your premium. I too don't care that they start you out on a teaser premium and look up in 5 years and you're paying premiums far over the home's retail value.
But if you didn't rebuild the home in a total loss, they'd only want to pay you a depreciated value which may be 2/3 what they say the replacement cost of your house is.
And if you have more than 2 claims of any kind in 3 years, you're going to show up on Lexus Nexus' high risk customer list, and the insurance company will cancel your insurance. Then other companies will double your premium--even if you can find one to insure you.
The insurance on our "new to us" 12 year old home we paid $350K for was going to be $4,000+ per year. We got it for "only" $2,200. Outrageous.