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Once an item is left with a dealer they become the “Bailee” and are responsible for items in their possession. This is often covered by their Commercial Property and Liability insurance or a rider. No repair entity could exist without this insurance as a large fire could be hundreds of thousands or millions in losses.
I wouldn’t get involved in how or who pays for the repair since that is not your concern. If they fraudulently submit a claim to a manufacturer they are on their own. You should demand an immediate repair with no cost to you and not sign anything until repaired to your satisfaction.
The risk you would have is Diminished Value when you go to sell it since a damaged unit that has been repaired is worth less than a never damaged unit if everything else is apples to apples. You could ask for some additional value consideration to address the diminished value if you wish.
If all things don’t get addressed to your satisfaction you can sue as a recourse.
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