Advice: What To Do, If Anything.....

i would never suggest non payment, that only escalates things

what i would suggest is getting the insurance company involved
your 1600 bucks might not be a big deal to the contractor, but they are in for 4000 on this job, and if they blacklist this contractor he may stand to loose much, much more future income

so, make your insurance company work for your, they will protect their investment