Insurance for a cheap rental

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I'm in the process of looking for a new insurance company. I've been wanting to do this for some time now...but the final straw was today. I'm closing on a rental tmrw that I'm paying 16k for...after minor rehab, I'll be all in for 20k. They want to insure the thing for 81k replacment cost, at a price of 384/year. Another company said they can do cash value of 30k, for 97/year. I've always heard replacement cost is the way to go yada yada yada...How does the depreciation work if the building burns down and there's a total loss? What if it's just a 5k loss? It seems crazy to pay 4k over the next 10 years for insurance on a property that i'm only paying 16k for..any ideas or suggestions?