It shouldn't matter what state you live in. This is between you and the
insurance company. They total the car, and pay you off. They then have a
wrecked car to dispose of and they normally give you right of first refusal
to buy it for scrap value. So, if you opt to keep the car, you receive the
settlement minus the scrap value. This can be a win-win for both parties.
The only loser is the dismantler who would have bought it and parted it out,
making maybe 10 to 100 times his investment back. On top of that, the
dismantler knows the IRS can't tie the selling prices to his actual cost,
the way they can with most retailers, so you can guess what that does for
his income tax.