Total loss being the bar seems crazy to me. A 20-50k unexpected expense for almost everyone would essentially result in bankruptcy or at minimum insolvency and long term debt.

That means you would need to hold enough money in short term accessible money (HYSA, etc) to self insure in that scenario, which is unachievable for most people.

Insurance should set a maximum cap to your pain no matter the circumstances… and I think the pain being >50k is quite unreasonable unless we’re talking about property that is worth in the millions.

Your point is perfectly valid. There is no single right answer. It just depends on what risk level one is comfortable with and that varies from person to person.