isn't the insurance company required to defend its insured?

The prospect of them having to pay lawyers to show up in court to defend their insured should incent them to up their offer significantly.

In small claims court, you could even argue lost fuel savings. If it really is a work truck, used in his business, then he was making a business investment in the truck, where there would have been a return on that investment over time from the fuel savings. He invested in the truck to extend its useful life in order to realize those fuel savings. This wasn't a fix up and flip, where fair market value would be relevant. He has been deprived of that return on investment.

Show them a spreadsheet showing how much he lost in fuel savings. Then show them how much he will have to spend to find another used CNG truck and fix it up to be in similar condition. The latter will be the lower number, closer to what he had invested in that truck. Tell the insurance company if it goes to court, he will be going after the higher number... loss of future income via fuel savings in his business.