That's certainly different than what I was told when my Harley got stolen. I asked the insurance company what would happen if it was found and they told me that the police would contact them and turn it over to them. The insurance company would have ownership of the bike since they had paid me off. I asked if the insurance company would contact me to see if I wanted it back and they said no, it would go to auction, and that they didn't have the resources to track down past owners after they were paid off. They just send them to auction and recoup what they can.
Maybe that car got returned because there wasn't any insurance.