I considered this issue, reviewed my policy and contacted the insurer. They explained my policy covers Dwelling (based on sq ft and type of construction), Other Structures (decks, porches, driveway, garden shed, etc.), Personal Property (contents) and Loss of Use...............so the lot is not even covered. Insurer assumes some risk that the lot and utilities utilities won't suffer much damage even if the dwelling is completely destroyed. Replacement cost rider is in place to cover things like demolition.
I think it depends on the value of land in your area, assuming replacement construction cost varies much less than the property itself. My property tax assessment is 34% land/ 65% improvement. My dwelling coverage is 80% of the total assessment and market price.
I guess the other option would be to match the coverage to the mortgage if you have one, but the policy is less than .2% of assessed value.