It doesn't matter if the tank was rusty or not. If it was operational, and it is now defective, it needs replacing. They cannot argue "wear and tear" as it was fully functional. Should your vehicle become damaged in any way as a result of someone else's negligence, you are entitled to claim for it. Should you be claiming via your own insurance, they cannot act in conflict to your interest and lawful entitlement. This is covered by the Financial Service and Markets Act 2000 and is a FCA regulation under ICOBS 8.3.3: www.handbook.fca.org.uk/handbook/ICOBS/8/3.html

Just because your insurer cannot understand how an item has become to be damaged, does not mean you're not entitled to claim for it. You can always claim via an accident management company or issue proceedings yourself via the small claims court to recover the cost of damages to your vehicle. Complain to your insurer and ask them to prove the damage is not related. They would need too in order to advise they aren't covering. Raise a complaint, then take it to the Financial Ombudsmen Service.