Asbestos in vinyl- insurance question

[vanlassie]

So I had a toilet flood, insurance estimates etc. They tested the vinyl UNDER the current vinyl in my bathroom, and it contains asbestos. They are intending to replace that vinyl, and therefore will mitigate the underlying asbestos vinyl (circa 1975) BUT here is my question.

They will give me a pay out, and my intention would be NOT to replace the vinyl because it is in perfect condition and only lifted slightly by the shower and this can be recaulked. I would prefer to take that money and use it towards upgrading the floor coverings in the two other rooms that were affected by the flood.

If I take a payout, I am unsure, and not wanting to show my hand to the insurance company, about whether I am required to do the exact repairs they estimated? And then, if I choose not to replace the vinyl containing asbestos (which I am reading is not that big of a deal and overblown as liability costing millions overall) then I will KNOW about it, and then have to declare it in any sale documents once I do sell my home....is this a serious situation if I leave it and declare it?

Maybe this is mainly a real estate question?
Thanks
Vanlassie