What's funny is that most insurance companies make people take out too much insurance at say $200 sq. ft. TW buys investments (they come with risk) like any and all investments. Then TC sues. TW asks investors in put their money in ALL. It goes down, where are those suits?
You concern is common in today's climate of market values going down. However, Homeowner insured values are based on replacement costs. It will take much more to repair/rebuild a home than the market value, especially after a catastrophe.
The cost of labor and materials increase significantly after a catastrophe. After all the storms this spring materials are probably in short supply which drives up the cost. With Irene being a NE event it will be even costlier.
That is why inurance companies require insurance to value on the basis of replacement cost.