I think you need to take the check without expressing or agreeing it’s a complete settlement, sue the builder for the difference if there not willing to make it up to you, and let the builder worry about getting reimbursed from UPS. It’s the builders fault and problem they didn’t insure it for enough, not your problem.
Your only problem is getting compensated for the builder not returning the engine to you.
Your not a customer in this , of UPS. They took a package from your builder and they assume the person they took the package from owns what’s in the package. They don’t care if who receives the package owns what’s in it or not.