Insurance being a negative expected value isn’t the scam. Insurance not paying for the thing you bought the insurance to pay for is the scam. They’re supposed to be working from the same agreement you’re working from, not some other one they made up that’s worse for you at random.

Or to put it another way: insurance should pay out the amount you could get if you sold your car, not the cost to buy another similar car.

Why would an insurance company think that OP would get less money selling the car than anyone else would get selling the same kind of car, though? It’s one thing if all the listings are for much higher prices, but if those listings are selling at that price, then that’s the market value and the insurance company is provably misunderestimating.