1st For Woman the most pathetic insurance

So my wife was in a vehicle accident last Thursday and the car was taken to the assessment Centre. 1st for Woman agent calls yesterday to inform that they wont approve repairs on the vehicle as there are to much damage. I have now called to understand the issue. Based on the feedback: Due to existing damage on one of the accident affected areas they cannot approve the repairs through one of their repairers, so now they want to pay a cash amount and return the vehicle as is. My question is how is it that my insurance I pay for every month can tell me they wont repair my vehicle after it was involved in an accident when I pay for this very reason. This is pathetic and I will take this further with the insurance ombudsman to address this. I've never had any of these issues with previous insurance companies. a previous incident they sent my vehicle to a repair centre that did repairs worse than a s**** yard. My question is what happens if the damages of the accident exceeds the value they willing to pay out.