Well, no. Not regardless of cost. That would be silly. Imagine if you owned a 1985 Rover worth £500, and someone drives into it. The parts needed are no longer made so they need to re-tool which costs £2M. Do they HAVE to do that?
Yes, that's a deliberately silly one, but the point is true. You could try suing the TP for damages like I said, but you'd have to prove negligence or that they owed you a duty of care, and then you'd still have to convince the judge that paying £7K to fix a car worth £6K is worth it. Never, ever going to happen.
Well it is regardless of cost, they don't have any get out clause with you. Whilst your extreme example probably would go the way you suggest, when we're taking a 5k repair versus a 10k repair, they have to pay. The whole insurance industry is geared up to make it as easy and cheap for themselves, hence you would have to fight it yourself and it wouldn't be quick or easy.