He needs the copy of the title for his paperwork. He can't do anything with the copy title. Liens are verified electronically. You can have an old title with no lien and got a lien afterwards. He simply wants to verify the VIN and ownership names. Plus it is needed to close his case file.
When you complete the settlement you'll sign over salvage rights and possibly limited POA for the insurance company to do the transfer for you or handle little things that come up with the process.
If you hold out longer, there can be issues with salvage and costs to store the damaged unit. Just keep that in mind if you plan on holding out months and not weeks.
