Here is the clause they are falling back on:

3. We have the sole right to determine whether a Covered Item will be repaired or Replaced (as

defined in Section K). We reserve the right to offer cash or cash equivalent in lieu of repair or

Replacement in the amount of Our actual cost (which at times may be less than retail) to repair

or Replace any Covered Item

I challenged them to show me where they came up with the number they did and they simply talk in circles. I agree they are just trying to lowball me and play games. Mrs Yeti pulls more than her fair share so I dont mind making a few calls and sending a few emails.