The purpose of insurance is to make you "whole" in the event of a loss, meaning it should put you back in the same position you were before the loss. if the payment was more than required to make you whole again the ethical thing to do would be to return the excess to the insurance company, or at least discuss it with them. If the opposite situation occured and thier estimate didn't cover your losses I doubt that many people would hesitate to ask the insurance company for more. In the case you mentioned about the Camaro Vs Civic, you still had a loss of your Camaro and the insurance company would make you whole again by comensating you the value of that Camaro at the time of loss, if you choose to replace it with something of lesser value the insurance company still has made you whole again by paying for the value of your loss. Imagine if you had a total loss of your Camaro and your insurance company wanted to replace it with a Yugo claiming it's still a car, it has 4 wheels and a motor.
