Your sum insured is always the max they will pay, so if replacement bike + extra's is more than that, then they will pay you your sum insured and you'll need to chuck in the rest. If your sum insured includes the extras, then they should pay for those as well. Usually if your sum insured is too low, then they will just pay you out the cash.
On cash settlements, they will usually only pay you what the bike will cost them to replace, ie if they can get it from dealer X at 10% less than what your quote is, then that is what they will pay. Usually though, dealer X will honour the quote they gave to the insurers, so your can get it for the same price from them.
If they authorise the replacement of the bike, that is usually done by give a buying order to the dealer. But you don't need to buy that exact bike again, you can always pay in extra to upgrade... (The dealer will be only to happy to take your money! 😄)
Someone mentioned applying average if you are underinsured. It isn't usually applicable to All Risk items, although some insurers do, so check your documents...
Glenn, if you'd prefer a cash settlement, just ask them... At the end of the day, all policies have a clause that states it is the insurers right to choose to replace, reimburse or repair, but they're usually pretty reasonable. Good luck!!
Edit: Grammar
