I've seen this happen a lot where the insurance is done over the phone. If the MkIV import that you are trying to describe to them does not appear on the list that they see on their screens, after a bit of trying to explain to them what the difference is, they just give up and stick it in as the MkIII, which they do have the option for.
They don't really care whether it's right or not, because it's still YOUR responsibility to check it when the documents come through. Even if you've explained everything to the person on the phone, if they put the details in wrong and you fail to check it, it's still YOUR fault, and your insurance will be void.
So don't accept the word of the call centre operator (especially a problem in India, btw, where the "yes-man" culture is commonplace) - they might just be fobbing you off with a MkIII insurance just to get the deal done!