As your house gets older, it does appreciate in market value but insurance goes off of replacement value. The cost of supplies and material to rebuild your house, should you have a total loss, goes up with inflation. Therefore the replacement value of your home will usually always go up while the market value will fluctuate.
Also, as your home gets older, more and more shite is likely to happen. The fire risk increases gradually with each passing year since wiring and other things get older. Attic insulation that is fire resistant loses is resistancy (is that a word?) to fire over time. Basically, there is a liability increase over time as the house gets older. Remember, you pay for replacement as well as liability coverage.
Most companies will allow you to sort of lock in your replacement value so the cost doesn't go up as much. You probably want to call your company and ask if this is possible. They may make you sign a form stating that you want to keep your home insured for its current value and never allow it to increase (remember, this still may not prevent a future premium increase due to cost of liability coverage).
Whatever you do, do NOT insure your home for less than 80% of the estimated replacement cost. If you do, you insure it for actual cash value which is the value of your home minus depreciation. If you have a loss when you're covered for less than 80% of replacement cost then you are seriously fricked.
Some people want to insure their home for less than 80% of its replacement cost since it's "not worth that now". This is almost never the case. Market value is totally different than Replacement Cost.
This post was edited on 3/5 at 10:50 am