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External hard drive fix R3 recovery Sheffield

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I'm not sure if I've made a huge mistake or this is just the price but I sent my hard drive for recovery with R3 data recovery in Sheffield (also linked from data recovery hospital).
Quote came through as £550 plus VAT but if it couldn't be fixed then it would be free so I sent it off. They had suggested I contact the my insurance company and they could send me a letter to forward to them. When I spoke to my insurers they said data recovery was not covered.....when I contacted R3 again they said they jus word the letter to be a "repair". This seemed a bit dodgy. They said they needed a part but would fund it themselves.
Got a call today saying the initial attempts and new part didn't work and the cost would now be £1500 to try something else but didnt work and another £1500 if they were successful. That's £3000 total compared with the original £550. Again they suggested filing an insurance claim.
They said it's a physical problem and the discs internally are probably scratched.
This seems like a complete rip off and a total scam.
Any advice? Are there decent recovery firms out there?
Thanks
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