Insurance in the UK

Back in 1984, I had a car stolen. It wasn't recovered for almost a year. In the meantime, the insurance company paid the rent on a car for me to drive. Now here's the kicker. When the car finally was recovered, I owed money on it. The car insurance didn't pay it all the way off, although they'd spent thousands on a car rental that would have more than paid for the stolen car. It made me wonder what they would have done if my house had burned down. Would the home insurance have rented me a hotel room, then told me they couldn't pay the fire damages?

Since I'm not in the UK, I can't really take advantage of Insure 121. Maybe if I could, I could get decent coverage and service.