Replacing your airbag is as simple as it looks just be careful not to sit in front of it as you replace it. Work from the side. The 95 and 96 models used the same mechanical airbags triggered by a sufficient jolt through the steering column.To remove you had to unscrew the arming bolt and then remove the retaining bolts. To replace, do it in reverse and be careful. I had similar damage to my 96 which also damaged the fan blade and had to replace everything in front of that point. You may also have rail damage near the steering box. check it out. The insurance company will look at it and probably figure that the cost of repairs would be around $4k and the vehicles value at less than that so it is likely to be totaled. You may need some frame straightening up front and for sure a new crossmember piece, both of which may require shop time by someone qualified. I spent $900 getting my front end rails and crossmember properly repaired and then spent another grand on used parts from salvage yards and did everything else, roughly an entire front clip minus the fenders. Your fenders could probably be pounded out quite easily if needed.
The insurance co will probably place a value somewhere between 3.5k and 4.5k tops and you can buy it back from between $400-700. If it is in rather good condition, 96 was an excellent year for xj's and parts is parts, afterall. If you are mechanical and enjoy projects, go for it. Fix it up with $1500 and bank the other $2k for your efforts. If not, walk away and find an xj for your bankroll amount. If it was your DD then you may have no choice. Glad you are ok but I feel for your jeep. Talk it over with a mechanically inclined friend after thoroughly looking things over, especially the undercarriage from the front axel forward. I used my accident like a semester at XJ University. And get an FSM as well.