Legal Question in Business Law in California

It depends. That is where the concept of "totalling" comes in. The maximum liability owed is the prior value less any residual value, or the cost of repair, whichever is less. When the cost of repair is greater than the original value, the car is "totalled." It still has some residual value, though, even just as scrap metal. If insurance companies weren't involved, technically the person at fault could pay the "blue book" value at the time of the accident LESS the scrap value, and would have satisfied their liability. In that situation, the liable party would not be entitled to keep the destroyed property. However, if the liable person pays the full value, then they are entitled to any salvage value of the property. That is what insurance companies do for two reasons: 1. it saves a lot of employee time by not haggling over the salvage value, which saves overhead, and 2. they can arbitrage the difference between the retail value of one totalled car that you or I would get from a salvage company, and a bulk rate that they negotiate with a large scrap car broker who is willing to pay more for a large steady volume of totalled cars.