That's kind of the point. The consumer doesn't just get his money back, he gets what he ordered. Maybe allow a lump sum payout that's like 5x what they consumer

That's kind of the point. The consumer doesn't just get his money back, he gets what he ordered. Maybe allow a lump sum payout that's like 5x what they consumer payed just to cap the losses the insurer could incur, while keeping a strong incentive to repair/replace as that's less hassle for the consumer and thus his preferred option. It saves time otherwise spend on shopping for a replacement as well as getting accustomed to said replacement.