Typically, a vehicle is considered to be totaled when the cost of repairing the damage would be greater than the current value of the vehicle. This could mean a relatively low amount of damage for an older vehicle, while a newer model could sustain far more damage and still be considered repairable. The current list value of the vehicle will be the primary consideration.
Once it has been totaled, your insurance company will deduct the amount of your deductible from the value of the vehicle, and write you a check. If you are making payments on the vehicle, the insurance company will usually write the check to the lien holder. It is also important to note that you are responsible for any loan amounts that exceed the amount paid by the insurance company, which can be a very substantial amount. To avoid this, you need a special type of coverage, known as GAP coverage.
Finally, you may elect to "buy" the vehicle back from the insurance company. Your insurance company will then subtract the salvage auction amount from the amount you would have received, and write you a check for the difference. In this case, it is important that you notify your insurance company right away, to prevent it being inventoried at a salvage yard. Once it has been inventoried, the vehicle is difficult to obtain without a dealer's license. This process may vary somewhat from one insurance company to another, but it is always important that you notify the insurance company of your desire to keep the car as soon as possible.