Just to shed a little light on the situation:
There was a lawsuit filed against an insurance company a few years ago. A car they insured was in an accident. A shop repaired the car with aftermarket parts - including an aftermarket air bag. The car owner was pleased with the repairs. Claim was closed.
Shortly after, the same person & car were involved in a much more serious accident. The air bags deployed again. This time there was some injury to the driver of the car. The driver sued the insurance company and the repair shop claiming that some of the injuries he sustained were cause by the airbag and that if an OEM airbag was used it may have deployed differently and not caused the same injury. The lawsuit was successful and a precedent was set.
Now, for the most part, insurance companies will not authorize repairs with anything but OEM parts. They will happily give you a cheque and let you bear the responsibility of deciding what quality of parts to repair with. This way they are absolved of any further liability.
There are A LOT more write-offs because of this.
So Shafhan, If you went to a BMW dealership and asked for all brand new OEM parts you may very well be over the $3000 that your car is worth. (especially if you call from an insurance company with 'deep pockets')
What is done with salvage?...
The insurance company will either sell the written off car to a recycler/scrap yard or auctioned off. The idea is to recoup some of the $$ paid out to the owner. This helps keep premiums down. Storage of a car costs $$ so the salvage cars are up for auction ASAP. (as experienced by craigIS).
One other point worth touching on,
craigIS: "repairs and things like that dont matter to an insurance company. they go by book value i believe."
It is reasonable to expect that a vehicle owner will keep their car in a decent state of repair and perform the necessary maintenance. Brakes, clutches, and other general wear items are generally not considered when settling a claim. Things that may have a mild effect on the value would be a recently rebuilt or new engine/tranny, but it isn't going to mean you recoup the cost of that new engine, maybe just a few hundred $.
Most claims are settled using fair market value. The adjusters I speak with use auto-trader and other classified pages to ascertain a reasonable value. Book value does not give as much consideration to mileage and condition.
Generally, when you are dealing with a claim, keep your insurance broker in the loop. Don't assume they always knows what goes on. When a claim is reported to our office, we send the report to the company and that is the last we hear of it unless the customer calls to discuss or complain. Let your broker know what you were offered for a settlement. They have experience with the adjusters & resources to help you decide if it is a fair offer.
Finally, a mild diatribe:
We drive BMW's because of the quality of the product and the driving experience that gives us. If you just wanted a car to get from A-B you'd be in a KIA or gawd forbid - a Daewoo. If you want quality and a good experience with your insurance coverage, especially with respect to claims, it is in your best interest to obtain coverage through a broker. When you use a direct writer or Bank based insurance company, there is no one there to be your advocate or hold them accountable.
Good luck Shafhan! It sounds like you have a reasonable adjuster who is willing to work with you. I hope things work out well for your situation.