Hi.
VERY DIFFICULT I KNOW !!
But you need to keep a cool head on this.
I know it's your car, BUT It's the insurance company problem, and it just may prove very expensive to fix. Keep record of who you speak to, what department, what time it was, and what they said.
Stress that their suggested repairer (RAC) whilst maybe OK replacing glass, seems incompetant to deal with elecronics fault they have caused, are not trained to repair air bag faults, and do not even have the equipment to do the job. As Marks DTM says, it needs Tech 2 to clear fault light, and they didn't even know that. Even the manager didn't know the whereabouts of the airbags !!
Point out this is a safety related problem and do they have any repairer on their list for this sort of problem. You need to be sure this airbag will operate under impact conditions
You must, (or at least be seen to) give them the opportunity to get it fixed.
Getting it fixed, and then sending them the bill is not the way at this stage. You need them to suggest to take it to VX to get fixed.
Remember, they don't know anything about your problem yet.
See what they say first, before the heavy threats.
Roger