As has been stated, what you paid for the bike is irrelevant, it's what it will cost to replace it with like for like that is relevant. Your contract is with the LBS not their insurers, they need to replace your bike, like for like, if they can't get a second hand one in the same condition then...
Windwave profiteering are going to kill sales in this country, the TK01 was on my list but not now Windwave have got involved and added £600 to the price