So as someone who worked as an insurance adjuster for 8 years, and understands both the car enthusiast's side, and also the insurance company's side, let me ask some questions, and once I have the answers to those, I can better advise you how to proceed.
1) What was the adjuster's estimate to repair?
2) What are the "open items" on the estimate? Meaning what items are not on there, but that they suspect may be damaged once they take the car apart?
3) What was the value of the car that they came up with?
4) Do you have a copy of the vehicle valuation report?
5) The tail light and trunk lid alone do not seem like enough to total out the car, but looking at the rear bumper, it looks kind of pushed in on the left side. Do you have pictures of the underside of the car, and also the left quarter panel? If the frame rail and/or quarter are buckled, that will add significant cost to the repairs, but if it is just a trunk lid and tail light, and some paint work (which you were ready to pay to have done anyway), then you should be able to work something out.
Also open the trunk and pull back the carpet and see if you see any buckling or damage in there. If all of this checks out, it may be worth removing the rear bumper cover to see if anything is damaged behind there. All of this is to identify exactly what is damaged and what is OK so you have a better idea what the repairs are going to cost you before you make any decision.
Here is my basic advice. First start with the vehicle valuation. They should have given you a report on how the value was calculated. Every state is different, but most states have to value the car based on other vehicles for sale in the area, and compare yours to theirs. If this is how the report is run, spend time looking through it. Call on or look at the other vehicles that they used as comparisons. Find out if any of them have had the suspension redone, or the transmission upgraded or replaced. Be critical of these cars just as though you were going to buy them, because anything you would have to do to these cars to bring them up to what yours was the day before the accident is something that should be taken into account.
Also make sure they did not unfairly hit you for conditioning. For example, if they deducted money for the peeling clearcoat, but every comparable vehicle for sale also has peeling clearcoat, then that is hitting you twice for the same thing, and is unfair. Your goal here is to make the valuation on the vehicle as high as possible, while also not being unreasonable. Saying you want more money because you had the car since new isn't going to go anywhere, as that is not considered of any value on the used car market. Saying you want more money because it will cost you more to replace it is a legitimate argument that they will have to listen to, assuming you can support it.
Once you have made the valuation as high as possible, you have a choice to make, and this is where the previous work looking in the trunk and taking the bumper off will come into play. Your choice at that point will be either to take the total loss money and run, take the money and swap your mechanical into another body, take the money and fix your car and have to deal with the salvage title, or work on the estimate to try to get it under the total loss threshold. Option 4 is the only one that potentially could save you from a salvage title, but the only way you can accomplish that is to get the repair estimate low enough that they are willing to proceed with the repairs, and ultimately, that translates to them paying you less money. If you are only a few hundred dollars apart, this may be a good option for you, but if you have taken the trunk apart and the bumper off and made sure there is no hidden damage, then you may be able to make enough money to pay for part or most of your paint job, and if that means having a salvage title on a car with low resale value to begin with, then so be it. If you do decide to try to avoid a salvage title though, below is how to proceed.
An insurance estimate will often have items on it that are standard practice on newer cars, but under the circumstances you may be able to take off. For example, if they are replacing the trunklid, they are likely blending the paint into both quarter panels for a good color match. This also requires removing all the trim and masking off the quarter glass. That alone is probably a $2-300 in repair work that could be taken off the estimate.
See if the estimate has time to set the car up on a frame machine and measure out the frame. If you have taken everything apart, and the frame rails, quarter, rear body panel, and trunk floor are all undamaged, then there is no need to do that, and so that is probably another $100 you can take off the estimate. He may have put repair and paint time on the rear bumper cover, so see if he can do an appearance allowance instead, which is basically a negotiated amount of money, less than the repair cost, in exchange for you living with some cosmetic damage rather than fixing it.
In certain circumstances, like this, that works well because it saves the insurance company money, while also possibly saving you from having to deal with a salvage title. If his repair estimate includes all these things, and is only over the total loss threshold by a few hundred dollars, then this type of stuff should be enough to lower the estimate cost, which then could bring it back to the repairable side. Also, an adjuster should be agreeable to this type of stuff, as it will show him saving the insurance company money, which is what his bosses want to see.
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