I bought my house for 200,000 and had 214,000 covered on the home owners insurance. I remodeled it and refianced to have one mortgage instead of building loans etc and it is now mortgaged for 260,000 and worth about 400,000. Do I have to specifically increase it, or did the bank do this with the refi. For instance, my payments include the taxes and insurance and I know the tax increased and this is reflected in my payments. They got all the info from my insurance carrier, did they automatically increase it to cover themselves? I do not want to pay more than I have to, but do not want a risk...

the mortgagee will increase it whether you like it or not. They want their risk covered. And you will have to pay for it.
Likely when they call the insurance company to get a Declarations page they will go ahead and increase the insurance then and likely the insurance company will do it for them (its called mortgage relations) and either bill you or add it to your escrow.

Check to make sure it was increased. If not then have it done. Don't trust any bank dear.