I had a very similar incident with UPS. I shipped a transmission to a builder once. It showed up with a smashed case. I had it insured for price of trans and UPS denied my first claim.
A very helpful phone rep with UPS told me (off the record of course) that they always deny the first claim. Make sure that you submit a second claim. I was paid the full amount on my second claim.
This policy helps get rid of a lot of people. Most people submit one claim, then when denied they would not think to resubmit. UPS saves money this way as probably over half the people just accept that it was denied and move on.
