Like all insurance policies, their homeonwers policy will pay living expenses etc at the time of the loss. Then they will pay to have the house rebuilt. They will not just write you a check for the cost of rebuilding if you don't rebuild. In that case you will get no more than the market value.
As mentioned below, USAA is a great company with a great reputation.
I have had insurance, auto and home and flood, with USAA for over 50 yars. They are, in a word, OUTSTANDING, in all respects. Your negative post is unfortunate. Hope you connect with USAA customer relations to fix this and let us know the results. If negative, I would be very surprised.