Under Directive 451 the bank may require you to insure the property that secures the loan, but only if it is the irrevocable beneficiary, and you may buy the policy yourself instead of through the bank's insurance agent. It may not make you insure the property for more than the adjusted loan balance: the balance of the loan minus the value of the land, plus up to 20%.
If you buy from a developer, the bank may not require insurance before the date the seller undertook to hand over the apartment. If you insure through the bank it must update the sum insured at least once a year to follow the falling balance.
The pitfall is confusing the bank's minimum with real cover. The sum insured the bank asks for can be lower than the cost of rebuilding, and a policy for the structure does not cover your contents. Decide how much cover you need rather than just accepting the minimum.
Example
Your loan is ₪1,500,000 and the land is worth ₪600,000 (illustrative). The structure part is ₪900,000, plus up to 20% of that, so the bank cannot require building cover above about ₪1,080,000.