I don't know your insurance, but as far as I know you are virtually always obliged to get the damage (here: costs for the ticket) as low as possible. Booking an economy Y-class ticket for ~5000 Euro may not fulfill this requirement...
A note on upgrading full-paid economy: Most of my economy tickets have booking-class B and I have some status at LH. I never got an upgrade, even on oversold ecnomy-flights. I guess, SEN/HON first seems to be the rule.