That is true, but looking at the whole picture which is you start with a lot, then you add a house, and now you have an improved lot with a house on it. That thing you end up with at the end, has a market value which can be compared with other houses in the area for their market value.

My home insurance covers the cost to rebuild my house in the event it is destroyed, but it protects the market value of my house because even if it is destroyed I can rebuild it to the same size and specification and have a house with possibly added market value because its made of newer material (and I would add more outlets than it currently has :-)

I agree that those two costs are very different things, but their linkage is, for me, inescapable.