Greg, I am sorry to hear that
,
I've been in the same situation 2 years ago... and by law you have no case..It's sad but I've been there trust me, you agreed on the $500 max even if you didn't know it even if you were miss informed....
Here is my best advice.
accept the $1000 they're offering you now then sue them, By doing that they are breaching the original contract that you signed in the fine print stating that they are covering you only for $500...
Then you will have no contract between you and them and you can sue them.
Still ask for a legal advice.
Good Luck my friend and I will keep my eyes out for the serial...