At 270,000 miles, your 740 was nearing the end of its useful life. However, you probably would have got at least another 30,000 miles out of it if the rest of the car was in decent mechanical condition. Personally, I would take the $2000 and RUN. But if you were really attached to the car, you could buy it back and, depending on the severity of the accident damage, repair it with junkyard parts. Most of the body parts on that car (rocker panels, fenders, doors, etc.) are "bolt-ons." If you husband is mechanically competent enough to repair a headgasket, he could probably fix the body damage if you can find the right parts at the wrecker's.

But again, my personal opinion is that the car served you very well for 13 years and a quarter million miles, and it did what it was designed to do (protect you in a collison), and you are being offered what I feel is very fair value for the car. If it had half its current mileage, it might be worth fighting the insurance co., but at 270k it is questionable how much life is left in the car, even with a new headgasket. I have an '84 240 wagon with 287,000 miles. It has been a very reliable and dependable car, but if it got totaled tomorrow and the insurance company offered me $2000 (which I doubt), I wouldn't even have to think twice.

If you are really in love with this car, you might think about putting the money towards a newer 740 or 940 turbo wagon. The 940 has the same powerplant, but is more "refined" and doesn't have the same issues that the 740 does (e.g. wiring harness failure). I doubt that the insurance company will be very flexible about this, but if you feel cheated, one way to get more for the car (especially considering the money and effort that you and your husband have put into it recently) would be to buy it back from the insurance co. and part it out. That is, disassemble the major parts of the car and sell them individually. This is usually what the wrecking yard will do with most totaled cars. You could probably get $500 for the engine + turbo alone. Not to mention the ECU, fuel pumps, brand new wiring harness, distributor, exhaust, etc. This kind of items are in high demand for cars of this vintage and are sold on EBay all the time.

Just my $0.02. I'm sure others will chime in.