Perhaps a sensible way of deciding which insurer should deal with the child's car seat would be to consider what the offending item is designed to do (Letters, 20 June, Insurance Times).
If the seat can be removed from the vehicle and be used to carry the child while, perhaps, walking in town, then I would suggest that the home contents insurer should deal with its replacement. However, if it can only be used in the vehicle, when presumably secured in place and possibly be considered an integral part of a vehicle used to carry children, then I would suggest that it be classed as an accessory to the vehicle. This would of course mean that any "personal effect" limit would not apply - after all, it isn't a pair of sunglasses, a torch or a CD. How would one define a roof rack?
Regardless of how you look at this, surely the question to ask of the motor insurer is... "Why didn't your engineer notice the item and arrange for its removal before authorising the disposal of the vehicle?"
In an apparently customer focused industry such as ours, it might be sensible to allow a little more room for common sense to prevail.