A customer gave me his pair of tefillin to examine and I accidentally cut the straps (retzuos). His retzuos were expensive, handmade ones.  

Q: Am I obligated to reimburse him so that he can purchase the same quality retzuos, or is it sufficient to reimburse him enough to purchase kosher retzuos?

A: Teshuvas Maharam Mintz (#113, cited by Be’er Heitev, O.C. 656:4) rules that one who damages a beautiful esrog does not have to reimburse the owner the value of a beautiful esrog; it is sufficient to repay the owner the value of just a kosher esrog. Precedent for this position is the Gemara (Bava Kama 78b) which states that one who steals an animal designated for a korban may repay the owner with any sheep, since a sheep, although smaller and less valuable than the stolen animal, fulfills the owner’s obligation to offer a korban (see Chacham Tzvi 120, which mandates specifying whether the owner intended to use the esrog personally or intended to sell it).

Many authorities reject Maharam Mintz’s position by distinguishing between an animal designated as a korban and an esrog. An animal designated for a korban cannot be sold (Pesachim 89b) and thus has value only in terms of the owner fulfilling his obligation to offer a korban. Therefore, the thief may repay the owner with a smaller animal, since the smaller animal will also discharge his obligation to offer a korban. In contrast, a beautiful esrog could be sold and the damage assessed in monetary terms, so the thief or damager must reimburse the owner according to the value of the esrog (see Chacham Tzvi, ibid; Mishnah LaMelech, Maaseh Korban 16:7; and Shevus Yaakov 2:120).

Some authorities suggest that even Maharam Mintz would agree that one who “borrows” a beautiful esrog is responsible for its full value. Since the borrower has all of the benefit from its use and thus is liable even if it becomes ruined due to circumstances beyond his control (see Tosafos, Kesubos 57), there is no doubt that he accepts to fully reimburse ifor any loss (Shulchan Melachim, p. 341).

Seemingly the same rationale applies to someone hired to repair an object, making him responsible for the full value of the object (see Erech Shai 304:5). However, others equate a borrower with a damager and contend that he may replace the damaged item with one that is kosher and is not obligated to replace it with one that is the same quality as the damaged item (Admas Kodesh 1:64; see also Maharsham 4:47).

Although many Poskim subscribe to the opinion that in the case of an esrog the damager must repay the owner the value of his beautiful esrog (Maharsham 4:47; Aruch Hashulchan 656:5), nevertheless, the damager can claim the halachah accords with the opinion that limits the extent of his liability (Bikurei Yaakov 656:3; see also Pri Megadim, O.C. M.Z. 656:1).

In this case, however, where the customer did not yet pay the sofer for the inspection, he may follow the opinion that maintains that the damager must pay for expensive retzuos rather than simply kosher ones and refrain from paying the cost of the inspection. Moreover, even authorities that subscribe to the view that one may discharge his obligation by simply providing kosher retzuos agree that there is a moral imperative to repay the owner the actual value of the damaged retzuos (Admas Kodesh, op. cit.).