When an insurance appraiser evaluates the damages to your car, he or she will decide how much it will cost to repair the car. This repair appraisal is compared to the "blue book" value of your car. The blue book value is the fair market value or retail value of the vehicle. In other words, how much would you have to pay a car dealer or individual for a car as similar as possible to yours. If the cost of repairing your car exceeds the fair market value, the car is considered totaled. You then receive the fair market value.
State laws can vary, if there are any in place, about when an insurer should find a car to be a total loss. Without a specific state law as a guideline most insurance companies will determine a vehicle to be a total loss when it is between 51 to 80 percent of its actual worth or basically when the repairs costs are more than the value of the vehicle. So when it is uneconomical to repair the car (they might also calculate the rental car cost, storage costs, etc when determining the cost of repairing the car compare to declaring it a total loss) they will find it to be totaled out.
If your car is determined to be totaled, and if you think that the fair market value offered by the insurer is too low, get more information. Get signed statements from automobile dealers that state the value of your car. Look in the classified section of the newspaper for prices of cars similar to yours. Use this information to negotiate a fairer settlement for you. Always get the information you need to support your case. If you don't ask, you'll never get a better settlement.
If your car is totaled and you get a new one you can get a fast, direct insurance quote for it here.