What i dont get is why didnt the insurance company pick up on it as im pretty sure when they put the reg number in now it gives them the vehicle details, so should tally them up and confirm with the customer that there correct. Unless of course the incorrect reg number is exactly the same make model and colour?

It is wrong if you dont get your money back though, especially when you can rob £200 worth of goods from a shop and probably get a fine of £20 or something stupid. Doesnt make any sense.