When my company had to deal with adjustors for a claim we were had core. We pumped the insurance company for every damage they were obligated to cover under the law.
They have ONLY 3 choices on how to proceed.
1. Return everything to an "as it was" condition. Usually if the cost of this exceeds 50% of the value they will just cut you a check.
2. Just cut you a check for the value of the car and total it.
3. Find sleazy ways to wiggle out of paying and wear down the customer to accept their lesser offers etc etc etc etc etc........All BS.
Your insurance company is refusing a legitimate claim on a possible techinicality. They will be in their right legally if you missed some technicality.
Now as to their claims for "flames that were not visible". This is a good thing actually. The adjuster just boxed himself in with that statement. Does your policy state that fire damage is covered only if flames are visible? I doubt that. That's like a house burning down with a smoldering fire and no flames. The the claim being thrown out that it was not the type of fire covered LOL! Possible but still BS.
READ YOUR POLICY !!!!!!