£2000 is quite believable these days, paint the bumper and blend into surrounding panels, then the standard equivalent credit hire car supplied by accident mismanagement sharks, repairs delayed to maximise hire charges.

The whole game is a rip off and it sounds like the third party owner wasn't exactly pleased that your daughter came clean where most of us here would have given her credit for honesty, knowing full well none of are as perfect as we might think, and done our best to mitigate the costs and got the job done for £250 tops which you would no doubt have gladly paid directly and nothing more to be said...it doesn't sound like the beemer owner was up for such an arrangement and sadly these days that too is understandable because they won't have known your daughter from a bar of soap.

However, you are where you are and the current insurer is doing their best to milk the situation and take advantage of your daughter, we can almost guess which insurer is involved here.

What i would do is contact a good old fashioned independent insurance broker, explaining the situation and offer them the photos to show what is involved and see what they can come up with from alternative insurers, you have nothing to lose by doing this and everything to gain, simply don't renew with the other one, cheerio.

If you have a good relationship with your own current insurer you could ask them if they would consider quoting for your daughter, same thing you can offer them the photos which they probably won't want as you are unlikely to be misleading them by the obvious fact you've offered the pics.

Hopefully others have some other better ideas.