This whole deal is a can of worms.

If you insure your house for $200K with "replacement value" as the requirement, the insurance company gets to evaluate, after the loss, whether you have insured the house for the proper amount. If they determine that you were "underinsured" by more than 20%, then, they don't have to honor the "replacement value" guarantee. The replacement value, as determined by them might be $50K more than what you currently have it insured for. In a total loss situation, you'd be screwed.

If you don't have "replacement value" then you've got "depreciated value". Now the SOB's get to determine the value of your 1921 house after depreciating the framing, siding, roof, etc. They might come up with a depreciated value that is significantly less than the $200K that you have for value. They won't pay more than the depreciated value no matter what the insurance value on the policy.

It's a very murky area and one that everyone should carefully examine for their own situation.