Generally speaking, the lenders require that you have enough insurance to rebuild your house. Of course, you do not need to insure the entire value of your home because part of the value is in the land. But if the worst happens and your house burns to the ground, the lender wants to make sure that your insurance is enough to rebuild the house. With the cost of building supplies going up, the cost to rebuild is increasing and therefore the need to make sure your homeowner's insurance policy covers the cost to rebuild (replacement value).
Now may be a good time to connect with your insurance company and ask for the replacement cost estimator to confirm that you have the amount of insurance you need. Hopefully, none of us will ever need to replace our house because of fire but better to know now than to find out when the problem occurs.