Money **** Insurance ****. OLD MUTUAL

My Home is insured for a value over the purchase price. R1 650 000. I recently had a burst geyser and the geyser was replaced, However the Damages caused by this Burst geyser is being processed as a secondary claim, another Excess payable. The Damages is estimated to be well over R20 000 in damages for the floors and Ceiling. The insurance tell me im under insured, i need to insure my home for Double its value (What??!!!) Due to this they are averaging my damages to a mere R10 000 and will not send someone out to do the repairs i must take settlement. This wont cover the material what about the labour?