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Lower cash offer than replacement cost after fire

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I told the insurance company I would rather have cash than replacement furniture after my fire. Why is the cash they have offered a lower amount than the replacement cost?

The answer depends on whether the insurer offered cash in the first place. If it did, then it has made its choice and it is not correct for the insurer to offer less cash because it would have been able to replace the goods for a discounted amount. On the other hand, if the insurer offered to replace the goods and you are asking it to change its mind and pay you cash instead, then it is correct in proposing that it will only pay the cash which it would cost the insurer to pay for the replacement.