When a car is totaled you get the chance to buy your car back from your insurance company for dirt cheap. If you don't buy it it gets sent to a closed auction where you need a salvage licence to buy the cars up for auction.
Same way most government auctions work except it's a closed auction not a public auction.
Source: http://www.impalaforums.com/automotive-discussion/334082-r-i-p-to-my-impala.html
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