Just playing the devils advocate here; if you had car full of rust and you were involved in a bingle. Would you expect the insurance company to restore it to new ?
Gronk, this isn't devil's advocating, it's being stupid. Did the rust cause you to have any accident? If the answer is no, I'd expect them to restore the car to the same point before the accident or compensate in like. Thus the is it pre-existing or new injury that caused the retirement? You're carport analogy is slightly better.
I also wouldn't be paying $10000s for the policy of a rusted car.
If I change my car insurer, there is a basic assumption that it is road worthy and there is an agreed method of valuing any payout, this then effects the policy cost.
If I'm paying $10000s for a policy, I'd want something a little more concrete.