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When you borrow money to buy a car the lender is called the lien holder. If you look at the title
on the car you will see a section where the lien holder is listed. That section usually has language that states that the lien holder is the "first payee."
The first payee gets paid first when ever there is a pay off of the car. This includes when an insurance company pays off on a totaled vehicle.
So the short answer is YES the insurance company should pay the lender first to pay off the lien on the title.
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