I've done quite a few reports for insurance companys regarding damaged systems. Usually from thunderstorms.
They usually come back with either authorisation to repair the machine or build a new one.
In the case of laptops, pda's etc. They usually offer a "as good as" replacement and sometimes a better one but you have to make up the difference.
If they offer you say a budget acer and you want a different laptop. get in touch and say you would prefer " XXX" and would they supply this if you make up the difference.
The fact that you have your own XP pro will make no difference. If it is the full version, you can upgrade from XP home or sell it.
You can, of course, still use office XP with your new system.