Plus we see it as a means to set you up and get you back on your feet again, not to put you in the exact same position you were in before.
Correct me if I am wrong, Curly, but I am 99% sure that if you are under-insured then your policy usually doesn't fully cover you. For example, your contents is worth $100,000 but you only insure for $80,000. You are 20% under-insured. So when you come to claim on your policy, the company will discount your payout by 20%. So instead of getting $80,000 you will only get $74,000 (ie: 20% less).

So you need to be very careful when setting your insured value.

Bath, to your OP, we have a debate every time we renew our policy - I favour more, DH favours less. But I fill in the forms and arrange payment so I win