I'd look at getting a better offer than that, then approach them about buying the car back out of the offer too, as its rear end damage you could probably break it/sell it as is and get more money back if the rest of it is in half decent nick.
My old W reg 1.4 had a minor (minor being not as bad as this) shunt and was written off about 5 years ago, The insurance company offered me £2600 and sold the car back to me as a write off for £495, as the damage was minor I managed to get it fixed for £500 and pocketed the remainder.