California uses the Total Loss Formula (TLF) to determine whether a vehicle is a total loss. TLF is the estimate amount + the projected salvage value compared to the ACV. If Est + Salv > ACV, it's a total. Est + Salv < ACV, it's repairable.
The estimate alone exceeds the value of your neighbor's car. It's a total. The insurance company has no say in whether or not chooses to retain the salvage. If there's a loan on the car, it's up to the bank,and 99.99% of the time, the bank will not let you retain salvage. If there's no loan on the car, it's 100% her choice. If she doesn't retain the salvage, insurance will pay her for the ACV + applicable sales tax, less her deductible. If she does retain the salvage, they will pay her the ACV less the salvage value and less her deductible. I'm not certain if they would owe her the tax if she retained the salvage. Every state is different, and I don't recall CA's rules on that off the top of my head.
I have no idea what the California law says, but I do know how the insurance companies work. Around 70-75% of value they total it. They also make mistakes. My Durango was totaled with $4,000 damage. Then they valued it and I got a check for $6,300 plus the Durango back. That was big win for me as I only had about $2,000 in it (bought it not running) and made $1,000 on the Durango I bought for parts. It now has a salvage title (requires brake and light inspection).
