This may depend on the insurance company. Some insurers writes off a car when the damage estimate is 2/3 the value of the car. The reaso they do this is that the actual repair costs usually are higher then the first estimate.
ANSWER
Actually, it is often a question of state law. Many states require that an insurance company declare a vehicle to be a total loss when the cost of repair exceeds a given percentage of the actual cash value of the car. The actual cash value is approximately the market value of a car of like, kind and quality as the subject vehicle, immediately before the collision. The reason for this is primarily the fact that the damaged vehicle is probably no longer safe to drive.
In return for paying the "total loss" value of the car, the insurer gets to keep the salvage, and thereafter usually sells it to recoup some of its payment. In other cases, the insured opts to keep the salvage, perhaps for parts, or perhaps to rebuild the car. In that event, the insurer deducts from the payment to the insured the anticipated salvage value.
If the car is rebuilt, it has to be retitled, this time with a "salvage title". This protects any later buyer by notifying him/her that the vehicle was at one time in a serious collision.
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