Because the repair shop appraisal costs more than the fair market value, you then receive the fair market value. The FMV is the blue book value minus any depreciation or wear.

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.

When your car is totaled, the insurance company has an obligation to "make you whole," as that is defined in the policy.

This essentially means you have to be left in approximately the same financial position (with respect to the item insured - not in respect to any liens or leases that hold title to your car) you were in before the accident. If you have physical damage coverage (comprehensive and collision) the insurance company will typically write you a check for the actual cash value of the vehicle, minus any deductible on your policy. If you are "upside down" on your loan ("Upside down" means owing more on a car than it's worth.) then you should consider GAP insurance for future policies.

Sometimes you can also negotiate to buy the car back from the insurance company after they pay for the total loss. Typically, the insurance company will try to salvage or auction a totaled car.