Insurance company would not have sufficient means to provide repair if no one is willing. Replacement might be possible, but is always costlier than repayment as you have to test the replacement product, too.
That's kind of the point. The consumer doesn't just get his money back, he gets what he ordered. Maybe allow a lump sum payout that's like 5x what they consumer payed just to cap the losses the insurer could incur, while keeping a strong incentive to repair/replace as that's less hassle for the consumer and thus his preferred option. It saves time otherwise spend on shopping for a replacement as well as getting accustomed to said replacement.
