The jeweler chipped my diamond...?

I took my engagement ring in to be repaired and during the process the jeweler chipped my princess cut stone. They are taking responsibility for the damage, and have given me 2 choices. 1. they replace the stone with something that is equal in quality to my stone, but keep my damaged stone to re-cut and then sell it, therefore, profiting off of my loss. Or 2. they re-cut my stone and compensate me with store credit for the loss in the value. I asked them to send the stone to the cutter to find out how much we would lose off the diamond and they came back with .05 karat loss and a $250 store credit. I am not totally satisfied by either choice. Can anyone give any advice on what I should do? Should I contact my insurance agent? I am stuck with making a monetary or sentimental choice and I lose either way. What should I do?