Insurance requirement from bank

[Dave Holland]

I'm getting conventional financing on a 4 unit property with a purchase price of $130k. The appraisal came back with a rebuild cost of $428k and my bank says my insurance must be for at least 80% of this cost. I was planning on insuring for less than this, around $150k, and obviously the insurance is now going to cost quite a bit more than I was anticipating. My banker said this is the industry standard to use 80% of the appraised rebuild cost. Is this right? Does anyone else who is wiser than me in regards to insurance have any tips to share?