@Registerfail
"Yes, but it's like car insurance, write your car off and you get compensation for what it would cost to buy a replacement car but it never really does so, it's always a few hundred short, and you'll never get back the time or money spent phoning around chasing these things, or the days off work to deal with them. You always lose out."
Well I had my car written off last year. The insurers paid me £4,000 minus my excess as they said that a replacement would cost £4K. I had actually paid less than that for the car a year earlier and managed to by a replacement for just short of £3K. So no matter how you look at it I did OK out of the deal.
A friend was recently offered £800 for his car with the excess already discounted. Or as an alternative £650 and he could keep the car and repair it himself. That was basically the £800 minus the nominal £150 scrap value of the car. That was a damn good deal as he basically needed a replacement front bumper and headlight which he got used for nuts.
So I think what you have there is a very bad analogy.
Insurers often pay out above the odds because it's easier and cheaper than paying for a courtesy car while the dispute rolls on.