Shane states it very well, the mortgage holder expects the house to be insured for replacement cost, not market value. Fortunately, the state reduced the amount of increase requested by Citizens and your insurance premium will not be increasing as much as you may have feared.
Why did Wells Fargo Contact you about a refinance, seems unusual if you are current on your mortgage and you still have considerable equity in your home?
Best of luck with your situation and feel free to contact me if you need any other assistance!
Steven J. Pahl e-PRO
Keller Williams Tampa Properties