The value of your home, and the cost to replace it, has also gone up considerably over the past 25 years.
Insurance companies accept risk. People who purchase insurance transfer their risks onto the insurance companies. Risk is constant, 24/7. As such, insurors earn their premium everyday; not just when there are claims.
You don't just pay firemen when there are fires.
Right. They accept risk just as a liberal accepts reponsibility. When its time to pay the piper, they look for any concievable way out.