Ask Patty has posted an excellent article that tells how your insurance company should adjust your claim should your vehicle be damaged due to a covered event. Bottom line is this formula (but check out the article for negotiation tips):
Retail value minus Salvage value = Amount that could be used to repair the vehicle.(Salvage value is the amount the insurer can sell a car for in its current damaged condition.)
Example: Retail value of $20,000 - Salvage value of $5,000 = $15,000 repair money available. If the repair were less than $15,000, then it would be less expensive to repair the car, but if the repair costs were closer to or more than the available repair money, then the insurance company would most likely total the vehicle. In many cases, there is still some room to negotiate. Some owners owe more on their car than the vehicle is worth and others have expensive add-ons that may be considered.
