A couple weeks ago I was involved in an accident which was not my fault. The claim adjuster figured that it would cost 10k to fix my 03' VW Passat. The insurance ended up totaling the car because it cost more to fix it then it was worth. I was not finish making payments on the car. I was wondering if it's true that the insurance company will give me money to purchase a new car even the last car was not finished in payments.

Not sure where you are getting these ideas. The insurance will pay the value of the car. That's why they total a car because the costs of repairs is more than the value. You can use what they pay you to pay off the loan and as a down payment on a new car. Hopefully, the down payment will allow you to get financing at the same or lower payment then you have currently.

Gap insurance is used when the balance of your loan is greater than the value of the car. It covers the difference so you aren't caught with a balance when a car is totaled. If you didn't have any, then you are stuck.