Nick - Dunno about the insurance but you should be able to recover most of the data off the hard drive; its very unlikely that its fried!
Insist that you get the old machine back from the insurance people and then take the drive out, Its going to be an old 2.5" IDE drive and you can pick up an external case from fleabay for about £4 that will fit.
I'm slightly biased but I would look to get a Mac and a Time Capsule just because I have been using computers for something like 28 years (my first was a ZX81 that I built from a kit!) and although Macs are just different enough to make the first couple of weeks annoying they do just work....Time Capsule is an external box that sits on your network and backs up your laptop every 30 mins, giving you a complete archive of everything - not seen anything similar for Windows (but there again I havent really looked!).
The other approach to making sure that photos are safe is to take out a pro flickr account and upload everything to it - you can set the viability to private so that no-one else can see them (although the idea of you with a tea cosy sounds nice
) - costs about $50 for 2 years and you can upload the original sizes; very handy for any drama!
As an indication, I have my Mac desktop and laptops backed up to two Time Capsules, my photos are backed up to another drive AND most of the keepers are on Flickr - I have lost stuff about 10 years ago that I could never recover, hence why I am so paranoid.....
Let me know if you need any help!
