I had a claim earlier this year, just on a lost item. I had sold it on eBay for $AU 20 (might have "cost" more, might not have, but it was second hand).

I had sent it through c&S but had no additional insurance. They lost it. They offered to refund the postage price, then with some gentle persuasion, they gave me the cost of the item as well based on the eBay sale.

moviemem - in all the legislation and policies I read last night, from memory, they say they will reimburse the replacement cost of the item up to the maximum amount insured,,,,, not sure how that ties in with your situation, but I'm guessing it does.