Being skeptical of your insurance company is not unwise, they exist to turn a profit, not to make your life easier. However you should not implitictly trust a used car dealer either.
Dealers often inflate sticker prices so that they can offer generous trade-in payments on clukersclunkers, and "free" finance, ask the dealer what the cash price is without a trade-in.
Expect a figure much closer to what you were paid.