My sense is that the folks buying $2M+ homes in the Bay Area or $1M+ homes in Tahoe have enough money in the bank that they could just rebuild in cash on the off chance that their home gets burned down. At that price point you're largely paying for the land. Cheap structures (which abound in Tahoe) can be built for ~$250K, while even a really fancy 4000+ square foot mansion in Los Altos can be built for < $1M. Most of the mid-level FAANG employees and ex-startup/growth folks easily have that much in liquid assets.