Batt or Blown Insulation Question (insurance, contractor, drywall)

[STLfan]

I'm having some ceiling drywall replaced as part of an insurance claim for storm damage. The total area is small and will likely be one 4x8 piece of sheet rock. The adjuster made an allowance for replacement of the blown insulation in that area of the attic.

My contractor wants to staple batt insulation to the drywall instead of using blown insulation. The primary reason being the insurance company allowed next to nothing for blown insulation (~$100).

Do you folks have any thoughts on this? The biggest downside I see to the contractor's method is it not filling gaps like blown insulation would. The best answer is probably to go back to the insurance co and ask for more money.