Hi Scott,
Here's the way it's handled in this area, and I suspect in your area also. Once the insurance company has totaled the car it goes to an insurance salvage yard pool. These yards have weekly auctions and the car sells to the highest bidder. Here in the Dallas area, there are two yards that auction off 3-4,000 cars a week. You get on their mailing list and they send or fax a list of what's being auctioned a few days before. When I last attended one of these auctions (a few years ago), anybody could bid on the cars. It may be nowdays you will need a dealers liscense to bid.
There are all kinds of stories of people picking up wrecked cars and making a fortune fixing and selling them, but you will be surprised at what the wrecked cars sell for. There is a lot of competition for the wrecks that have a possibility of being resurrected, (body shops buy them, use them for fill in work, and sell them to tote-the-note lots or other marginal dealers) and you are bidding against wrecking yard owners who can make more off the parts of that Mercedes or Land Rover then what a intact car sells for in the retail market. . Here in Texas, the cars bought from the insurance yards will come with a salvage title, which is supposed to follow them for the remainder of their on road life.(there are ways unscrupious folks get around this)
There is one other way a seriously wrecked car can re-enter the fleet. That is when the owner of a wrecked car buys his own car back from the insurance company for the salvage value. The insurance companies use the total of salvage value and cost of repair compared to the retail value to determine whether a car is a total or not. The owner can receive retail value from the insurance company, pay the salvage value to the company and use the remainder to fix the car. If an owner buys his car from the insurance company it does not end up with a salvage title. But the insurance company usually will not insure the car again except for liability coverage. This happens more often then you would think, especially with older Mercedes.
HTH,
Dave