If you had a paid insurance contract for your building, they would have been obligated to pay claims under that contract. Insurance companies do tend to try and pay out as little as possible, but they can't sell you a policy on a building and then turn around and say they don't cover that type of building.
They certainly have every right to decide not to renew the policy if it no longer fits their risk profiles. Insurance companies do this all the time.
I don't think you'll get anywhere on your assertion that claims on the old policy would have been denied. Since you didn't make a claim, you have no way of proving that. You can try complaining to your state's insurance commisioner, but I don't think you'll get very far.