Can ins co deduct one claim from the settlement of another?

What is the name of your state? California

In February of this year, I was involved in a hit and run accident where the other driver collided into the passenger side of my car. The passenger side from fender to rear door were scratched and dented, but the car was still driveable. Since I work fulltime and am a fulltime student, I hadn't had time to get the car repaired. Earlier this month, my car was stolen and later recovered, with fairly minor damage to the engine (the radiator needs replaced).

Everything was going smoothly with the insurance while dealing with the theft. The damage was less than the value of the car, and so they were going to do repairs. I asked them if it were possible to go ahead and do the repairs for the hit and run at the same time. They said it would be possible. A number of days later, the insurance company told me that they were now going to total out the car. So they sent me a check for $X (to compensate me for the hit and run) and are going to deduct that amount from the settlement for the theft.

Are they allowed to do this? What sort of recourse do I have?

Thank you for any help you give me )

You are being compensated for a car with a bunch of unrepaired damage that you have already been compensated for. It is not the insurance company's fault you did not have the time to get your vehicle fixed. This is standard operating procedure.