C.H.
I too was leary about taking the insurance company's suggestion. One problem is that they probably won't cut any secret deals. Those deals are good for old cars that you'll drive into the ground someday.
However, I believe that they also recommend them because they don't putty in a big dent when they know it should be replaced, taking value away from your car for the future.
So, if you have a newish car and want to preserve its value in a resale situation, think of that. Also, get a company that will warrantee their work for a long period of time. (One that I went to, not recommended, showed peeling paint 1.5 years later, then more after 5 years. They had a lifetime warrantee so they will re-do it for free. (But they were not on my insurance company's list. I never had a paint job go bad with a company recommended by my insurance.)