The amount of coverage may be based on the insurance companies estimate of the cost to replace the dwelling, contents, etc. The annual cost of the policy may be based on the amount of coverage (location, estimated replacement cost of the dwelling, age of dwelling, wiring/mechanics, contents, extra coverage's, amount of deductible, etc.). The owners credit may also be considered by the insurance company.
I suggest you contact a minimum of three insurance companies for their estimates and proposals. You may find that they may vary not only in their annual premium but also in what each recommends for the amount of coverage.