Auto Insurance Claims: Auto Insurance Claim

Question
A few days ago, while waiting for the light to turn green at an intersection, my car was hit by the car behind me who was hit by another driver who obviously was driving while intoxicated.  The driver admitted fault. At the scene, it did not appear that the damages were extensive although I should mention that it was night and it was raining. I was able to drive it home with no problems. Upon further inspection the morning after, it appears that the right quarter panel had major dents, the rear bumper on the right side was pushed in and the wheel well is almost touching the right rear tire. I called the insurance company that day and was informed the other driver is at fault. The insurance company made arrangements for a rental and since I did not want to risk any more damages and accidents (I was afraid to drive the car because of the lack of clearance between the tire and the wheel well)I had agreed to have the car towed to a shop they recommended hoping that they will be able to start on repairs right away. I did not hear from them for a couple days and decided to call them.  They are now claiming that they may "total" the car. But the problem is the amount that they are quoting as the value is well below what I currently owe on the car and well below KBB value. And although I have gap insurance, I am afraid that I will end up the "loser" in this situation. All I want is to be put in a situation where I would have been had the accident not happened. It appears that I may have to save up for a down payment for another car which may take some time.  
For reference, I am including the following information: I bought the car used 14 months ago. It is a 2004 Nissan 350Z convertible with 23000 miles. It had 34000 miles at the time of the accident.  It was in good to excellent condition. The at-fault driver and I have the same insurance company (GEICO). Any advice would be greatly appreciated.

Answer
I understand your frustration, but it is a good thing you have gap insurance.  If your car is a total loss, the insurer is responsible for paying the actual cash value of the vehicle.  Unfortunately, your loan amount is simply not relevant to the amount they owe you.  This is the law in every state.  

They will determine the actual cash value by estimating what you could have sold the car for immediately before the accident.  There are many ways to do this.  I think (not sure) GEICO uses a vendor called CCC to get this value.  KBB and Edmunds are other sources. My company uses NADA. You could also call a few used car dealers and ask them for opinions as to value.  Document the names, phone numbers, and opinions.  Compare all this to Geico's offer and try to negotiate something fair.  

If you owe more than the car was worth, the gap insurance will cover the difference.