You have dug your own hole on this The flat owner does not own the plaster, floors, kitchen units etc, they are leased for x years and at the end of the lease to be given back repaired or replaced as appropriate. As JKO says your covenant to insure does not have much bearing on this and stands in it's own right for rebuilding purposes as defined in the lease.
In simple terms and in most cases, it requires the flat rebuilt as if it were a new build home, no occupants possessions and ready to carpet curtain etc.
There are many specialist insurers and brokers for blocks of flats policies who can help including advertisers here. The people to whom you spoke clearly don't understand it.
Most importantly you need a valuation for insurance purposes and that has nowt to do with the re sale value of both flats.
Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers