On a normal Homeowner's policy there will be a limit for the Dwelling/Building, which represents the most the insurer will pay to rebuild the house. The problem is building reconstruction costs increase, and in some cases they can vary wildly in a year. So the limit that was appropriate at the beginning of the policy term may not be sufficient to cover the cost to rebuild the home six months into the policy. So once upon a time an insurance company came up with the idea to offer an endorsement that guarantees the insurer will pay whatever it costs to rebuild the house, even if the costs are more than the limit of the policy (now every insurer offers this to be competitive). The one important condition is that the house be insured to it's full replacement value at the time of application (or renewal), the value of which is determined by various programs that insurers approve of and brokers/agents use. This way the client no longer has to worry about whether their limit is sufficient to rebuild the house. The problem with log homes is that it's pretty near impossible to determine how much it costs to rebuild one without having to hire a contractor to actually build one and report how much it cost afterward. As there is no program out there that can accurately estimate how much it costs to rebuild a log home very few, if any, insurer is willing to provide Guaranteed Replacement Cost on the building. That means is it costs more than $400,000 to rebuild the home (what you paid for it is no indicator of what the replacement cost is because you have to factor in debris removal and site/foundation preparation) the insurer will not pay any more than the limit of the policy, which means you will responsible for anything beyond that.
As for endorsement 78, the vast majority of Homeowner's policies have separate limits for: 1. the building; 2. detached private structures (detached garages, sheds, gazebos, etc); 3. personal property; and 4. additional living expenses (the extra costs incurred should the home be damaged by a peril covered under the policy and made uninhabitable). Some policies have one limit for all for four items (usually calculated as twice the building limit). This is usually done if you have a client that has no detached private structures and/or the personal property limit is way above the replacement value of their contents. The theory is the limits that are not used or under used under one coverage can be used to increase the other coverage. So the limit that would be provided for detached private structures can instead be used to boost the limit of your additional living expenses. The insurer has excluded this endorsement from your policy because a single limit is one way for a clever agent to ensure a client who does not qualify for Guaranteed Replacement Cost can have some additional coverage should the limit for the building be insufficient yet the limit for the other three items is excessive. The insurer seems adamant that they will not pay more than the policy limit to rebuild the home.