No, there is no rule. It boils down to an educated guess. I don't know where you live or who your insurance company is, but many times, you are allowed to select the contractor of your choice. My suggestion would be to get 5 inspections and bids from the most reputable guys in the area. Then you would have 5 professional opinions on whether or not this floor can be salvaged, and what it would cost to make it right.

I live In KY and my insurance is Nation wide (who I don't feel like are on my side right now). They said I could use anyone I wanted but sense their guy said it could be sanded thats what they are wanting to do and only willing to pay for.

Stick to your right to have a functional floor, mk. As Gary says, get multiple quotes and evaluations. This would out-weigh a single opinion from the insurance company's guy.
If they insist on proceeding with repair and re-sand, and it doesn't turn out satisfactorily, you have every right to insist that it be redone correctly. However, this will prolongate the time your house is upset, so make sure your adjuster understands that you aren't going to accept less than what you had.

thanks for all your help I will get the other bids.