It might be good to just demolish and rebuild from the sounds of it.

Generally, an insurance company is taking the unique features of your home and determining, based on their data, what it would cost to rebuild your home if disaster struck.

The rehab consisted of rebuilding the deck, pouring new front concrete steps, painting the exterior of the house, revamping all the landscaping, knocking down a wall in the living room to help create more of an open concept, sanding and coating hard wood floors, new carpet in bedrooms, changing out several light fixtures, swapping out the vanity in the bathroom, updating the kitchen with new appliances and creating an open concept by knocking down a wall, painting the entire interior, adding recessed lighting through the living room, updating all plumbing, and installing new gutters.

I'm wondering if you can use a HELOC to do a complete tear down and rebuild. 

Long term: there will be people who choose not to rebuild if their home burned down, so there may be some land available in residential neighborhoods that would be easy to build on. 

If you have replacement cost then you can easily rebuild if you choose to.

That’s put you in the green monthly along with free “rent” for yourself and help rebuild cash reserves for your next property.

You aren't going to rebuild a new building, most of the time.I also set my deductible for 5k. 

Please let me know your thoughts/experience on if I should go cheap to save more money each month and only have a chunk of money to rebuild with if it were to burn down, go expensive so that if anything were to happen, I would have a much nicer house rebuilt, or keep shopping around for something closer to what I want on coverage?

Trash out, landscaping, interior paint, deck rebuild, minor repairs, new backsplash, new appliances, all new furniture and kitchen supplies.